Filthy Riches

The Ashcroft and Carnahan campaigns profit from money laundered through a new and deliberately confusing fundraising scheme

But there's a catch. A detour around the law. A big loophole that allows corporations, unions and individuals to give unlimited amounts of money to the national, state and local political parties, as long as the parties use the money for generic party-building endeavors and not for anything that directly supports a specific candidate. Dubbed "soft money," the funds cannot be used, for instance, to take out a television ad saying "Vote for Candidate X" but can be used to take out a "generic" ad that says "Candidate X sure is swell."

Up until this election, this soft-money loophole was one of the biggest concerns of campaign-finance reformers, who watched six-figure donations make their way steadily into the party committees, which in turn took out ads "generically" supporting specific candidates. This has been the big issue in campaign-finance reform in recent years, the subject of the McCain-Feingold bill two years ago and the topic of much discussion during the failed campaign of U.S. Sen. John McCain (R-Ariz.) this year for the Republican presidential nomination. The soft-money loophole never got plugged.

This election cycle, the pols started using a new vehicle to drive money through that loophole: the joint fundraising committee.

Octavio Diaz

These committees are set up by arms of the national parties in conjunction with federal candidates. In Missouri's Senate race, the NRSC -- an offshoot of the Republican National Committee (RNC) -- joined the Ashcroft 2000 committee to create the Ashcroft Victory Committee. Likewise, the DSCC -- an offshoot of the Democratic National Committee (DNC) -- linked with the Carnahan for Senate committee and launched Missouri 2000.

But how these state-of-the-art hybrids work depends on the point of view of the person doing the explaining.

From the candidate's perspective, here's how the system runs: Together, the candidate and the party decide to host a fundraising event. They hire waitstaff, caterers and musicians, and the coordinated arrangement helps ease administrative hassles for the co-sponsors. "In order for a campaign and the DSCC to raise money at the same event, costs for food, staff, entertainment are split," says David DiMartino, spokesman for the DSCC. "By creating a joint fundraising agreement, both committees are working to cover the costs and defray expenses."

Adds Stuart Roy, spokesman for the NRSC: "These are fundraising committees, not fund-spending committees. The only spending they do is for overhead, events, mailings, things of that nature." So a date is set for the fundraiser, and invitations go out to contributors who want to give both to the candidate and to the national party. "It's a convenience for donors," DiMartino says. "Instead of having to go to two events at two different times and write two different checks, the donor can go to just one event and write one check to the joint fundraising committee."

The money goes into one account, the joint fundraising account, and is later divvied up accordingly. But because the national parties are involved in the joint fundraiser, a donor can write a check for as much as he or she wants. If the donor writes a check for $50,000 (and hasn't already contributed his or her $2,000 limit to the candidate and $20,000 limit to the party), then $2,000 of the money goes to the candidate as hard money, $20,000 to the senatorial campaign committee as hard money and the remaining $28,000 to the senatorial campaign committee as soft money, ostensibly to pay for party-building efforts.

But soft money can also be used for "issue" ads, meaning that either the national party or the state party can buy ads portraying the candidate as great on education, health care or guns or telling voters that the candidate's opponent is a stooge for teachers, doctors or gun owners -- as long as the ads don't tell viewers whom to vote for or against. It's a legal distinction, to be sure, but one that is lost on the voter.

And taking a donor's soft-money contribution to the joint committee and funneling it into a national or state party committee to be used for "issue" ads in the candidate's state means the donor and the candidate both know that the donor's soft-money contribution is the same as the donor's giving the money directly to the candidate's campaign, which, of course, would be illegal.

This is precisely the point of a pending federal complaint filed with the FEC by Common Cause in April regarding joint fundraising committees set up by Hillary Clinton and Rudolph Giuliani in the New York race for the U.S. Senate. The soft money pouring into their joint committees ended up benefiting the candidates in the end, the complaint states. The names of the Clinton and Giuliani joint fundraising committees are "New York Senate 2000" and the "Giuliani Victory Fund." The word "respectively" could be added to the end of that sentence but probably isn't needed, which is exactly the point of the complaint.

The names of the committees, the complaint alleges, "make clear to donors that their contributions will aid specific candidates, namely Clinton and Giuliani." That's because even though the money may go to the NRSC or the DNSC, it is later shipped to the state parties, which will then take out issue ads in support of their candidate.

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