[Congressional Record (Bound Edition), Volume 150 (2004), Part 9]
[Senate]
[Pages 12146-12148]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 BIPARTISAN CAMPAIGN REFORM ACT OF 2002

  Mr. McCAIN. Mr. President, since the Bipartisan Campaign Reform Act 
of 2002, BCRA, became law, many of its detractors have mistakenly 
argued that it is ineffective and unworkable. Mr. President, I ask 
unanimous consent that two articles from the Washington Post, an 
article from the Wall Street Journal, and an article by Anthony 
Corrado, a visiting Fellow at The Brookings Institution, be printed in 
the Record immediately following my remarks. As these articles 
describe, BCRA is having exactly the effect intended. Furthermore, as 
Mr. Corrado points out, BCRA did not serve as the death knell for 
America's political parties; their fundraising remains strong.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, June 8, 2004]

     Republican `Soft Money' Groups Find Business Reluctant to Give

                         (By Thomas B. Edsall)

       Republican operatives attempting to compete with Democratic 
     groups for large sums of unregulated presidential campaign 
     funds have run into a number of roadblocks, including 
     reluctance on the part of many corporations to contribute to 
     new independent groups.
       The Federal Election Commission last month cleared the way 
     for liberal groups to continue raising millions of dollars of 
     unrestricted contributions, and now GOP groups that have held 
     back are joining in. But in a sign of the problems GOP 
     leaders are encountering, one of the key Republican groups, 
     Progress for America, failed in its bid to recruit James 
     Francis Jr. to become chairman.
       Francis ran the Bush 2000 campaign's ``Pioneer'' program, 
     which produced 246 men and women who each raised at least 
     $100,000. PFA organizers sought out Francis because his close 
     ties to the administration would have lent enormous clout and 
     prestige.
       ``It gets down to, `What does it look like?' And it might 
     not look like I was independent,'' Francis said, adding that 
     he could have complied with laws requiring total separation 
     from the Bush campaign, but critics would still have raised 
     questions.
       Meanwhile, election law lawyers said corporations are 
     showing significant reluctance to get back into making ``soft 
     money'' donations after passage of the McCain-Feingold law 
     that went into effect on Nov. 6, 2002.
       Unlike political committees regulated by the FEC, 
     ``527s''--named for the section of the tax code that governs 
     their activities--have no restrictions on the sources or 
     amount of contributions, and some have received gifts of $5 
     million or more. Republicans, encountering corporate 
     unwillingness to give to GOP 527s and seeking to capitalize 
     on the Bush campaign's unprecedented fundraising success, 
     urged the FEC to clamp down on the these groups' activities.
       ``I would say that on the whole the corporate business 
     community has been very reluctant to support 527s,'' said GOP 
     lawyer Jan W. Baran.
       Kenneth A. Gross, an election lawyer, said he has told his 
     corporate clients ``to proceed with caution.'' Prospective 
     donors of soft money should be sure to get affirmative 
     statements that the organization asking for money will not 
     coordinate activities with federal candidates in violation of 
     the law, and that the organization will abide by the rules 
     governing political communications, he said.
       Overall, pro-Democratic 527 organizations have raised at 
     least $106.6 million, according to PoliticalMoneyLine, three 
     times the $33.6 million raised by pro-Republican groups in 
     this election cycle.
       The Democratic advantage disappears, however, when these 
     figures are added to the amounts raised by the national party 
     committees and the presidential campaigns. Then the GOP pulls 
     far ahead, $557.6 million to $393.6 million.
       Lobbyist and former House member Bill Paxon, who is vice 
     president of the Leadership Forum, a Republican 527, 
     acknowledged that the GOP 527 effort will not be able to 
     match the Democrats'.
       Paxon said donations in the $25,000 to $50,000 range have 
     started to come in from at least a dozen corporations, 
     including Pfizer Inc., Union Pacific Corp., Bell South Corp. 
     and International Paper Inc. In 2002, those four companies 
     gave far more to Republican Party committees, more than $2.6 
     million.
       ``We don't expect to be posting huge numbers at the end of 
     this filing,'' covering the period through the end of June, 
     Paxon said, ``but we have laid the groundwork.''
       Democrats have set up at least seven new 527 organizations. 
     These groups are on track to raise $175 million to $300 
     million for ``independent'' issue ads and get-out-the-vote 
     activities.
       Financier George Soros, Progressive Corp. Chairman Peter B. 
     Lewis and Hollywood writer-producer Stephen L. Bing have each 
     given more than $7 million to such groups as the Media Fund, 
     America Coming Together and MoveOn.org, which are working to 
     defeat President Bush.
       Privately, organizers of the Republican 527s said they have 
     been banking on an outpouring of corporate support to defray 
     start-up costs and to get their programs up and running. 
     Corporate and union money cannot be spent on television ads 
     mentioning federal candidates for 60 days before the general 
     election, although it can be used for voter mobilization.
       Signs of corporate wariness toward making soft money 
     contributions could be found in a number of places.
       After Francis rejected the chairmanship of PFA, a key 
     leadership role has fallen to co-chairman James W. Cicconi, 
     general counsel and executive vice president at AT&T, but the 
     company has declined to say whether it will give any money to 
     the 527s. ``We have not made a comment about that at all,'' 
     said Claudia B. Jones, director of media relations for AT&T.
       A Wall Street Journal survey of the 20 top businesses 
     giving soft money before the new law went into effect showed 
     that more than half of the 20 companies are resisting 
     pressure to give, and only one, Bell South, would say 
     affirmatively that it plans to make corporate contributions.
       Baran said that in addition to corporate wariness toward 
     making soft money contributions, the success of the Bush 
     campaign and the Republican National Committee has worked as 
     a disincentive to giving to the 527s:
       ``A lot of folks on the business side are looking at the 
     $200 million the Bush campaign has raised, and the millions 
     the RNC has raised, and they aren't sure the funding [of the 
     527s] is all that necessary.''
                                  ____


              [From the Wall Street Journal, June 7, 2004]

                   Companies Pare Political Donations


Republicans Feel the Brunt As New `Soft Money' Rules Upend Traditional 
                                 Giving

                          (By Jeanne Cummings)

       Washington.--Republicans are getting a cold shoulder from 
     some of their traditional corporate benefactors, putting them 
     at a fund-raising disadvantage against new, well-financed 
     political organizations touting the Democratic message.
       A Wall Street Journal survey of the top 20 corporate donors 
     to national political party committees during the 2002 
     election cycle found that more than half--including the likes 
     of Citigroup Inc., Pfizer Inc. and Microsoft Corp.--are 
     resisting giving big-dollar donations to the new, independent 
     organizations that were created after a 2002 campaign-finance 
     reform law restricted such contributions to the political 
     parties.
       The reticence illustrates an uneasiness on the part of some 
     of the corporations to get sucked back into the world of 
     unlimited political contributions that they thought campaign 
     reform had left behind. They also seem reluctant to give to 
     untested organizations that are dedicated to partisan 
     political activity, rather than to policy or legislative 
     issues.
       Their attitude sends a signal that a major source of the 
     ``soft money''--the large and unlimited donations to the 
     national parties that long fed the political system--may have 
     dried up, at least in the short term.
       ``It reflects what many advocates of reform said: that much 
     of this money was not natural to the political process,'' 
     said Anthony Corrado, a campaign-finance expert at the 
     Brookings Institution.
       The corporate coyness could be an unexpected fund-raising 
     boon to Democratic presumptive nominee John Kerry, who is 
     enjoying an extraordinary year of fund raising.
       The big-dollar soft-money contributions were the financial 
     hallmark of past elections, and the flood of such 
     contributions included unregulated and unlimited checks

[[Page 12147]]

     from corporations, labor unions and wealthy individuals. 
     Political parties are barred from accepting soft money under 
     the 2002 law.
       However, several new political groups, formed outside the 
     parties in the wake of the law, now are seeking those same 
     checks to conduct political projects, such as voter-
     mobilization efforts and advertising campaigns.
       The Democrats' soft-money base, largely comprising labor 
     unions and wealthy liberals, has responded readily, 
     depositing $40.5 million in new organizations, which are 
     playing a significant role in the presidential campaign.
       For instance, the Media Fund, an advertising organization 
     founded by former Clinton aide Harold Ickes, has spent $15 
     million attacking President Bush or defending Mr. Kerry. 
     America Coming Together, a voter-mobilization group headed by 
     labor turnout guru Steve Rosenthal, has spent nearly $20 
     million enrolling new voters that could neutralize or best 
     the grass-roots work of the Bush-Cheney operation in swing 
     states.
       Republicans had hoped the Federal Election Commission would 
     shut down these groups. But the commissioners didn't, and 
     that has Republicans playing catch-up on tough terrain.
       The corporations contacted by The Wall Street Journal that 
     aren't giving in this cycle made about $21.2 million in 
     contributions to the national parties during the 2002 cycle. 
     More than half of that money went to Republican committees--a 
     sum that would have given the new Republican groups a boost 
     in catching the Democrats.
       The reluctance of some big companies to give could give 
     cover to other corporations, which collectively contributed 
     $267 million to both parties in the last election cycle--or 
     more than half the $496 million of soft money raised in 2002, 
     according to the Center for Responsive Politics.
       ``To the extent the big companies use their muscle to 
     reject entreaties by political organization to give money, 
     the medium-size firms will feel that they have a more 
     credible position when they reject them,'' says Nathaniel 
     Persily, a campaign-finance expert at the University of 
     Pennsylvania Law School.


                             Old Reliables

       Among the companies not giving to these new organizations, 
     whether they have Democrat or Republican ties, are some of 
     the biggest and most reliable corporate donors to the 
     parties, including Fannie Mae, Verizon Communications Inc. 
     and FedEx Corp. Pfizer's decision to bow out of the process 
     means that another 2002 big giver, Pharmacia Co., is also out 
     of the game, since it has since been sold to Pfizer.
       Other companies, such as Altria Group Inc. and Freddie Mac, 
     have refused solicitation so far this cycle, but haven't 
     adopted a blanket no-giving policy.
       Only BellSouth Corp. said it has decided to donate to the 
     groups. AT&T Corp. and American International Group Inc. 
     refused to say what they plan to do.
       This corporate attitude doesn't mean Republican groups 
     won't generate substantial sums to finance independent 
     operations; the party has a healthy roster of deep-pocketed 
     individual donors.
       But executives say it's difficult to justify donations to 
     shareholders because the core missions of these new political 
     groups, at best, are only tangentially connected to the 
     company's legislative and regulatory priorities.


                             Track Records

       In contrast, the Republican National Committee and 
     Democratic National Committee had platform policy statements 
     on labor, telecommunications, and tax policy.
       ``In the past we have given to pre-existing organizations 
     that we could look at their track records'' and how their 
     work advanced the company's priorities, said Misty Skipper, a 
     spokeswoman for CSX Corp. The company's former chairman, John 
     Snow, is President Bush's secretary of the Treasury but so 
     far it has refused solicitations for this election cycle.
       ``The new organizations are still evolving and that makes 
     it harder to make a detailed analysis, so we will take them 
     on a case-by-case basis,'' said Ms. Skipper.
       Since the law governing these groups is unsettled, 
     executives say it also raises the risk a corporate donor 
     could get dragged into a political scandal. ``Any time there 
     is a new system put in place there is a lot of uncertainty, 
     and nobody in corporate America likes uncertainty,'' said 
     John Scruggs, vice president for government affairs for 
     Altria, another company that is holding back for now. ``I 
     think everybody would just like to see how all this will work 
     before they make any firm decisions.''
       Perhaps the biggest reason for the reluctance is many 
     executives felt the soft-money system amounted to extortion 
     of private businesses. ``It was bad for the country and bad 
     for the political system. And what's bad for the political 
     system is only bad for business,'' said Edward A. Kangas, 
     retired chairman of Deloitte Touche Tohmatsu who led the 
     corporate fight for passage of the 2002 reform law.
       Businesses may open their wallets in future campaign 
     cycles, and they are still contributing to party conventions 
     and a few party entities exempt from the ban, including the 
     Democratic and Republican governors associations.
       The chilly reception the new outside organizations are 
     receiving from corporate donors is prompting one of the 
     leading Republican groups, Progress for America, to 
     concentrate its efforts on soliciting wealthy individuals, 
     says President Brian McCabe.
       Former Congressman Bill Paxon, who leads the Leadership 
     Forum, an organization associated with the Republican House 
     caucus, said flatly: ``We will not have the total number of 
     resources the Democrats have.''
       Still, the Leadership Forum has assembled lobbyists and 
     influential Republicans committed to raising $25,000 apiece. 
     Next month, it will hold a fund-raising event featuring House 
     Speaker Dennis Hastert.
       But the House leadership's embrace of the forum caught the 
     eye of watchdog organizations monitoring possible violations 
     of the law's ban on coordination with elected officials. ``We 
     will be filing new complaints,'' said Fred Wertheimer, a 
     leading reformer.


                          CORPORATE RELUCTANCE

       Former corporate soft-money donors are declining to give to 
     new independent political groups seeking the big checks that 
     parties cannot accept anymore.
       Who's Giving: BellSouth.
       Who's not giving: AFLAC; Altria Group; BlueCross and 
     BlueShield; Citigroup; CSX; Eli Lilly; Fannie Mae; Freddie 
     Mac; Lockheed Martin; Microsoft; Pfizer; and Verizon.

     Source: WSJ research.
                                  ____


                [From the Washington Post, June 4, 2004]

                    A Better Campaign Finance System

                          (By E.J. Dionne Jr.)

       Pity the poor campaign finance reformers. All their dreams 
     are supposedly going up in smoke.
       After all, both President Bush and Sen. John Kerry passed 
     up federal matching funds in the primaries so they could 
     raise record sums of private money. Groups theoretically 
     independent of the parties have run millions of dollars worth 
     of ads, often using huge donations from the very rich. Kerry 
     considered declining to accept the Democratic nomination at 
     his party's convention in July so he could have an extra 
     month to raise and spend private money.
       Critics of reform see these developments as signs of a 
     loopy system. In fact, the 2004 campaign will be remembered 
     as one in which the political money system became more 
     democratic and more open. Small contributors have more 
     influence this year. Big contributors have less. Those new 
     big-money political committees are getting a lot of attention 
     because they are now the exception rather than the rule.
       Does this mean that the new system pushed through by John 
     McCain and Russ Feingold in the Senate and Chris Shays and 
     Marty Meehan in the House has brought forth perfection? Of 
     course not. Their law was simply a first but important step.
       Thanks to the new law, candidates for the presidency, the 
     House and the Senate are not themselves out soliciting 
     unlimited contributions from rich and well-connected people 
     or from big corporations. A lot of business guys are relieved 
     that politicians considering bills that affect their 
     companies aren't on the phone suggesting that it would be 
     awfully nice to see them and their corporate checkbooks at 
     the next ``soft money'' fundraiser.
       The hope of McCain-Feingold was to create a more broadly 
     based political money system--more people contributing in 
     smaller amounts. Partly because of the law and partly because 
     of the inventiveness of political entrepreneurs such as 
     Zephyr Teachout, Howard Dean's director of online organizing, 
     that is what is happening.
       Dean began the democratizing process during the primary 
     campaign by creating a base of tens of thousands of small 
     donors. Kerry got the Dean message. He started peppering his 
     speeches with references to ``JohnKerry.com'' and asking for 
     donations. (Bush, in fairness, can be reached at 
     GeorgeWBush.com.)
       Kerry then proceeded to break all Democratic Party records, 
     raising more than $117 million at last count.
       The Kerry Web site recently featured Cathy Weigel of North 
     Kansas City, Mo., as its 1 millionth online contributor. For 
     a mere $50 contribution, Weigel got a call from Kerry and a 
     promise of ``a great seat at the Inauguration and a prime 
     visit to the White House.'' Such calls and promises used to 
     go to big soft-money fundraisers who bagged a million or so 
     in contributions.
       Yes, problems persist. They always will in this imperfect 
     world. By failing to regulate the ``527'' political 
     committees (named after the section of the tax code they are 
     organized under), the Federal Election Commission needlessly 
     opened a loophole that could push the system back toward big 
     money. This loophole won't destroy the entire law. Under 
     McCain-Feingold, outside groups will have to operate on 
     smaller contributions starting two months before the 
     election. But the loophole should still be closed.
       The system regulating presidential primaries is entirely 
     antiquated, one reason Bush and Kerry both dropped out of it. 
     It worked well for a long time, but now it needs fixing.
       It's absurd that simply by delaying his party's convention 
     into September, Bush gave

[[Page 12148]]

     himself not only an extra month more than Kerry to raise 
     private money but also a leg up afterward. In the general 
     election campaign, Kerry will have to stretch the $75 million 
     he gets in public money over three months; Bush will have the 
     same amount to spend in just two months.
       The system needs stronger incentives to encourage 
     candidates to base their campaigns on small contributions. 
     Tax credits could cover the cost of providing candidates free 
     airtime. And federal candidates should get the ``clean 
     money'' option that allows politicians in Arizona and Maine 
     to virtually eschew private fundraising. Those clean-money 
     plans have given new people a chance to enter politics 
     without mortgaging their houses or their souls.
       Those who would abandon all efforts to limit money's 
     influence on politics are urging that we live with 
     plutocracy. By indiscriminately pronouncing even successful 
     reform efforts as failures, reform's foes are trying to 
     undermine any attempt to make politics a little more honest, 
     a little less subject to the whims of the wealthy, a little 
     more democratic. The nation's campaign money system is still 
     flawed. But it's better than it used to be.
                                  ____


                               [May 2004]

  National Party Fundraising Remains Strong, Despite Ban on Soft Money

                          (By Anthony Corrado)

       The national party committees continue to outpace the 
     fundraising totals set in the 2000 election cycle, despite 
     the ban on soft money. The latest totals suggest that the 
     national committees are adapting successfully to the new 
     fundraising restrictions imposed by the Bipartisan Campaign 
     Reform Act (BCRA), more commonly known as McCain-Feingold, 
     and that they will have the resources needed to mount 
     meaningful campaigns on behalf of their candidates in the 
     fall election. Moreover, the parties have demonstrated 
     financial strength despite the unprecedented fundraising 
     efforts of their presumptive presidential nominees and 
     unrestricted fundraising by so-called 527 committees and 
     other nonparty organizations in the quest for campaign 
     dollars in the hotly contested race for the White House.
       After 15 months in the 2004 election cycle, the national 
     parties have raised a total of $433 million in hard money 
     alone, compared to $373 million in hard and soft money 
     combined at this point in the 2000 campaign. Every one of the 
     six national committees has substantially increased its hard 
     dollar fundraising in response to the ban on soft money. The 
     Republican committees have replaced all of the $86 million in 
     soft money they had solicited by March of 2000 with hard 
     dollar contributions subject to federal limits. The 
     Democratic committees, which were much more dependent on soft 
     money than their Republican counterparts, raising more than 
     half of their funds from soft contributions at this point in 
     2000, have already replaced most of their soft money receipts 
     with new hard dollar contributions.
       This surge in national party fundraising is the result of a 
     substantial increase in the number of individual contributors 
     that have been added to party rolls. While the higher 
     contribution limits for national party committees adopted 
     under BCRA (up to $57,500 per person every two years) have 
     produced millions of additional dollars for these committees, 
     the vast majority of the increase in party hard money 
     receipts is a result of the extraordinary growth in the 
     number of small donors on both sides of the aisle. (1) No 
     longer able to solicit unlimited soft money donations, the 
     parties are investing more resources in direct mail, 
     telemarketing, and Internet fundraising, with notable success 
     in soliciting small contributions of less than $200. The RNC, 
     which for decades has had the largest donor base of any of 
     the party committees, has added more than a million new 
     donors to its rolls since 2001. (2) The NRCC, in 2003 alone, 
     recruited more than 400,000 new contributors. (3) The DNC has 
     increased its number of direct mail donors from 400,000 in 
     2001 to more than 1.2 million so far in 2004, and increased 
     its number of email addresses from 70,000 to more than 3 
     million. In the first four months of this year, the DNC 
     posted 35 million pieces of fundraising mail, which, 
     according to DNC Chairman Terry McAuliffe, exceeded the 
     amount of fundraising mail posted by the committee ``in the 
     entire decade of the 1990s.''(4)
       As anticipated by most observers, the Republicans have 
     proved to be more successful in raising hard dollars than the 
     Democrats, outraising the Democrats by a margin of two-to-one 
     and increasing the fundraising gap between the parties. 
     Overall, the Republican committees collected $288 million 
     during the course of the first 15 months of this cycle, as 
     compared to $216 million in hard and soft money combined four 
     years ago. The Democratic committees took in $145 million, as 
     compared to $157 million in hard and soft money combined four 
     years ago. The Republicans have more than doubled last 
     cycle's hard money total, while the Democrats have almost 
     doubled their hard money receipts, increasing their take by 
     89 percent. The most recent quarter, however, suggests that 
     the Democrats' investments in small donor fundraising are 
     paying off and that the party may be beginning to narrow the 
     gap. In the first quarter of this election year, the 
     Democrats received $50 million as opposed to $82 million by 
     the Republicans, and recent reports suggest that fundraising 
     on the Democratic side continues to strengthen.(5)
       Even so, the Republicans have increased their financial 
     advantage as compared to four years ago, when the Democrats 
     controlled the White House. The gap has grown from about $59 
     million to $143 million. The Republicans are therefore likely 
     to have an even greater financial advantage over the 
     Democrats than they did four years ago. In 2000, the 
     Republican national party committees received approximately 
     $346 million in hard money, as opposed to $204 million for 
     their Democratic opponents.
       The gap between Republicans and Democrats is much narrower 
     in terms of cash available to spend in the months ahead. As 
     of the end of March, the Republican committees had almost $86 
     million of net cash available to spend, led by the RNC, which 
     has a cash balance of $54 million. The Democrats had $43 
     million available to spend, led by the DNC, which had $27 
     million in cash. The expenditure-to-cash ratios for each 
     party are now roughly equivalent, with the Republicans 
     raising twice as much as the Democrats and generating twice 
     as much net cash.
       When BCRA was adopted, many observers expressed concern 
     that the law would weaken the parties by depriving them of 
     the resources needed to mount viable campaigns on behalf of 
     their candidates. Yet, to date, the parties have proven that 
     they can effectively adjust to a hard money world. They have 
     altered their strategies and ended their reliance on soft 
     money, replacing large soft money donations with thousands of 
     small individual gifts.
       The rise of a number of federal-election-related 527 
     organizations, which are not wholly subject to federal 
     contribution limits and may raise funds from unlimited 
     sources in unlimited amounts, has not dimmed the resources 
     available to the parties. So far, the monies raised and spent 
     by these committees represents only a portion of the monies 
     the party committees have received, and a relatively small 
     share of the total resources spent so far in this year's 
     federal elections. In the first 15 months of this cycle, the 
     national parties raised $433 million. State and local party 
     committees collected more than $94 million for federal 
     election activity, including $59 million by Republican 
     committees and $35 million by Democratic committees. The 
     presidential contenders, George Bush and John Kerry, took in 
     more than $270 million. Congressional candidates garnered 
     $583 million, or 35 percent more than they raised at this 
     point two years ago.(6) The major new 527 organizations 
     active in federal elections in the aftermath of BCRA (Joint 
     Victory Committee 2004, Media Fund, Americans Coming 
     Together, MoveOn.org, and America Votes) raised slightly more 
     than $47 million, while Club for Growth, a conservative 
     group, generated more than $5 million.(7)
       To what extent this will change in the aftermath of the 
     FEC's May 13 decision to defer immediate action on proposed 
     regulations for 527 groups remains to be seen. But it now 
     appears that the parties are benefiting from the deep 
     partisan divide within the country and the high level of 
     competition in the presidential race, which is spurring tens 
     of thousands of individuals to contribute to their preferred 
     party for the first time. This suggests that the funds spent 
     by nonparty groups will supplement, rather than overshadow, 
     the role of the parties in 2004.

                          ____________________