Filthy Riches

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

Anheuser-Busch Cos. Inc. is an equal-opportunity campaign donor, and nowhere is that better illustrated than in the brewer's contributions to the two major political parties and their congressional candidates. Since January 1999, the company has written a grand total of $762,350 in checks -- some of it considered "hard" money, with strict limits under federal campaign-finance law, but most of it "soft" money, on which there are no limits. With eight weeks left before Election Day, it seems reasonable to assume our hometown brewery's contributions will hit the million-dollar mark.

After all, A-B gave some of the soft money in $100,000 and $50,000 chunks. For instance, the brewery gave the National Republican Senatorial Committee (NRSC) $50,000 on Jan. 29. That same month, the company handed over $100,000 to the Democratic Senatorial Campaign Committee (DSCC) in two $50,000 checks. On Dec. 6, it gave the NRSC another $50,000. And on Feb. 15, A-B dropped an additional $100,000 into the coffers of the Democratic National Committee.

Meanwhile, it's been handing out hard money as well. On Jan. 21, the company's political-action committee (PAC) gave Ashcroft 2000, the campaign committee for incumbent U.S. Sen. John Ashcroft (R-Mo.), the $5,000 maximum allowed before primary elections. Six months later, on June 24, the PAC gave Carnahan for Senate, the campaign committee for Ashcroft's Democratic challenger, Gov. Mel Carnahan, $5,000 as well. On Dec. 2, it gave Carnahan another $5,000.

Octavio Diaz

But one $50,000 donation stands out among all of A-B's giving: It was made on Sept. 24, 1999, to something called the Ashcroft Victory Committee. This is what's known as a "joint fundraising committee," which means it's a collaborative effort between Ashcroft and the Republican Party. The A-B donation begs a few questions: Why would a company that has given money to a candidate and his political party turn around and give money to a "joint" committee between the two? And because the joint committee cannot spend money directly on any political activity or campaign, where does that money end up?

The questions are significant, because the Ashcroft Victory Committee has reportedly raised $2.5 million. The same questions apply to Missouri 2000, a joint fundraising committee between Carnahan and the Democratic party, which has raised $2 million as of this month.

The devil, they say, is in the details, but when it comes to the trendiest new money-generating strategy in federal elections, the joint fundraising committee, the details are hard to come by -- probably by design.

Even as the politicians and national parties they team up with claim that joint fundraisers make it easier for donors to give money to multiple entities at the same time, the funnels, tunnels and tributaries of the tortuous new system make a mockery of federal election law. The details, for instance, about what happened to the $50,000 Anheuser-Busch donation are impossible to track. By the time the money collected by a joint committee flows through four different state and national party committees and "federal" and "nonfederal" accounts, the truth has been washed away, and the new fundraising technique allows money that would otherwise be banned from supporting congressional candidates to do exactly that.

"It's a way, in essence, for the candidate to launder money through the party," says Don Simon of Washington, D.C., general counsel for Common Cause, a money-and-politics watchdog group that recently filed a complaint about joint fundraising committees with the Federal Election Commission (FEC).

And like most modern washing machines, this one has a spin cycle, and whirling around in it are national party committees, senatorial party committees, congressional party committees, state party committees and candidate committees, all with their own federal accounts and nonfederal accounts, which in turn are ruled by allocation formulas and transfer methods and contribution limits, which are further complicated by the different state and federal laws that govern them and the partisan ways of reporting it all. Republicans do it one way, Democrats another. A certain percentage of the funds is reported to the FEC, the rest, presumably, to the state ethics commission. Sometimes. Trying to find out how joint fundraising committees work, who contributes money and how that money is eventually spent is an effort safe only for diviners. Pat Harvey, executive director of the Missouri Alliance for Campaign Reform, suggests that they are "almost impossible for normal people to understand."

Once the wash is hung out to dry, it's so mangled as a result of the cycle that it's hard to tell what's clean and what's not.

When it comes to "hard money," federal law is fairly clear: It's money that can be spent directly to get a candidate elected. And contribution limits are set to prohibit the wealthy from having inordinate influence on federal elections. Individuals are limited to donating $2,000 to a candidate per election cycle ($1,000 for the primary and $1,000 for the general elections); corporations, labor unions and other special-interest groups can give $10,000 per election cycle, and then only through PACs that collect voluntary donations from employees or members.

In other words, the Ashcroft 2000 campaign has raised $6.4 million and the Carnahan for Senate Campaign has raised $5.7 million from individuals and PACs giving within these set limits. In addition, individuals and PACs can make donations of hard money to political parties within the limits: $20,000 per year for individuals, $15,000 for PACs.

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.

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.

"This scheme institutionalizes the practice of federal candidates making direct solicitations for soft money to be used in their campaigns, and systemizes a direct relationship between soft money donors and federal candidates in a manner that plainly violates the spirit and the letter of the federal elections laws," the complaint states.

But proving that allegation isn't easy, because how the money is doled out and reported follows a plan presumably hatched by a confederacy of magicians.

The first clue comes when a spokesman at the FEC explains that unlike every other type of campaign-finance report, the actual filings of the joint fundraising accounts are not posted on the Internet but kept on microfilm in Washington, D.C. Copies of the filings can be ordered, but they take weeks to process.

"Besides," the spokesman adds, "a lot of the information isn't in the reports anyway."

A sensible question arises: Why not?

"Because it's not on there."

The information isn't all there because each of the parties posts its information in a different way, and each way leaves something out. Both parties, according to Roy of the NRSC, file hard-money contributions received by their joint fundraisers. This would include PACs and individuals giving within their contributions limits.

But for soft-money donations, the Republicans list who gave how much on what date but not how the money was then distributed to the sponsors of the joint committee. The Democrats, on the other hand, report all federal or "hard money" contributions and how they were distributed but do not report any nonfederal or soft-money contributions or how that money was distributed to the joint committee's sponsors. Neither reports who gave how much or how that money was distributed. In short, the donor's money cannot be traced to its eventual use, making enforcement of the law impossible.

In addition, according to the FEC, some money doesn't ever get reported anywhere. For example, Richard Baron of McCormack Baron in St. Louis gave $2,000 to Missouri 2000 on Dec. 14 and gave an additional $10,000 on May 30, totaling $12,000 donated to Carnahan's joint committee. But the FEC only lists $10,000 as having been sent from the fundraising account to the DSCC. What happened to the remaining $2,000 hasn't been reported anywhere; or it was spent on fundraising events listed on Missouri 2000's report, which is only on microfilm in Washington, D.C.; or its final destination is a mystery.

None of the information about who gave how much soft money to Carnahan's joint fundraising committee is available, because the Democrats don't report it. So the next best thing you can do is go to the FECInfo Web site (www.tray.com), a private site that posts all filings with the FEC. According to these figures, Missouri 2000 took in $1 million from individual contributors and $15,500 from PACs. And the site lists the names of the individuals and the amounts they gave, along with the same info about the PACs and their contributions to the joint committee. But it does not list any of the nonfederal or soft-money contributions the committee received.

So in order to find the soft-money donations received, you must either depend on a representative of the joint committee to tell you or hire a psychic.

DiMartino, of the DSCC, obliged and gave us some overall figures: Carnahan's joint fundraising committee, Missouri 2000, distributed $430,000 to the Carnahan for Senate campaign committee in hard-money donations and about $2 million to the DSCC ($1.1 million in hard money and $963,000 in soft money).

So what happened to the $2 million the DSCC received from Carnahan's joint fundraising committee? Well, it was poured into the DSCC's money pot, which, according to the FECInfo Web site, contained $10,936,197 this election cycle. And Carnahan's joint committee was one of the top contributors to the DSCC with its $2 million transfers. So far, the Web site reports that the DSCC handed over $16,500 in federal or hard-money contributions to the Carnahan for Senate Committee and $221,834 in federal or hard money to the Missouri Democratic State Committee. It shows no nonfederal or soft-money transfers to the state party committee.

But a trip to the Missouri Ethics Commission's office in Jefferson City throws a little more light on the money flow. The state Democratic Party committee's report shows that the DSCC made nonfederal or soft-money transfers totaling $1.2 million to the state committee.

And just how was that money spent? According to FEC reports, the state party committee gave $10,000 to the Carnahan for Senate committee and spent a total of about $1.5 million for "issue" ads or, technically speaking, "media buys."

And just how many of the ads had to do with getting Carnahan elected this November? This is where the money flow can no longer be tracked. The party filings do not report -- and are not required to report -- just what the ads were for or even which particular race they were spent on.

On the Republican side, the Ashcroft Victory Committee -- the joint committee sponsored by Ashcroft and the Republican party -- collected $891,250 during this election cycle, according to FECInfo: $284,045 from individuals and $5,000 from PACs in hard money, $602,000 in soft money. The soft-money donation includes the $50,000 received last September from Anheuser-Busch Cos. Inc.

How that money was spent is unclear. Roy, of the NRSC, declined to provide any figures. But the FECInfo Web site notes that $530,000 in hard money went directly from the Ashcroft Victory Committee to Ashcroft 2000. This would seem to contradict the figure of hard money received, which is only $289,045. But it may be explained if one accepts another report, this one from the National Journal's "CongressDaily," which says that Ashcroft's joint fundraising committee raised $1.5 million in hard money and $984,000 in soft money.

As to what happened to any of the soft money collected by Ashcroft's joint committee, what has been reported to the FEC is that $35,000 went to the NRSC and $530,000 in hard money went to Ashcroft's campaign committee. All we know from the reports is that the NRSC did give $17,500 in hard money to Ashcroft 2000, the campaign committee, and that the NRSC also gave $71,325 last year to the National Republican Committee (RNC).

Presumably Ashcroft's joint fundraising committee has given a lot more money to the NRSC or the RNC, but so far it hasn't reported that information.

Is any of the soft money raised by the Ashcroft Victory Committee, then, being funneled back to Missouri to be used for "issue" ads praising Ashcroft or trashing Carnahan? The FEC information shows the RNC sending $112,894 in contributions last year to the Missouri Republican State Committee. And a look at the ethics-commission reports filed in Jefferson City by the state committee shows that the RNC also gave $272,000 this year in soft money to the state committee.

The filings of the state committee show that it has taken in about $2.1 million altogether from various sources. As to whether any of that money was spent to buy ads to help get Ashcroft elected, the report says $624,000 of it was spent on "issue ads." Once again, the money flow is impossible to track beyond that vague description.

The real sticking point in all of this, though, is based on the Common Cause complaint alleging that what the national senatorial committees take in from the joint fundraising committees is then funneled to the candidate's state party, which then buys ads supporting the candidate.

But the state parties, like the joint fundraising committees, have an elaborate accounting system that separates hard-money from soft-money donations and transfers. And because state parties help out federal candidates as well as state candidates, they must navigate state laws for state candidates and federal laws for federal candidates, and it's too hard to document what money is being spent on what. So expenses are paid for by both hard and soft money in accordance with an allocation formula determined by the FEC.

"For example," says Roy Temple, spokes-man for the Missouri State Democratic Party, "my salary is automatically paid for by what's called an administrative split. I can't reasonably account for the percentage of my time spent helping in federal races vs. nonfederal races. The FEC has a formula at the beginning of the election cycle, and they say, 'For the period of this election, your administrative split is this.'

"Issue ads have to be paid for on the split," Temple continues. "So issue ads aren't paid for with all soft money, they're also paid for on a hard-money/soft-money split as well. There's some accountability built into that, which assumes there is some benefit for a federal race."

So any money coming to the state party from the senatorial committees is designated as hard or soft money. Then, when the state party buys an ad, even an issue ad, it is paid for with both hard and soft money according to the allocation formula set up by the FEC.

But try tracking all of that.

Then, to find out how much the parties spent for television ads, the easiest thing seems to be to call the state parties themselves and simply ask. But spokesmen from both state parties say they don't disclose that number outright, because they don't want the other party to know how much they're spending.

Daryl D. Duwe, spokesman for the Missouri State Republican Party, has a suggestion, though. "If you were to go to all of the television stations in the state, you could look at their files and then add it all up."

A trip to just one television station, however, is enough: Because these ads are considered "issue ads," the parties aren't required to list how much they paid for them, only that they were taken out.

Douglas Weber, a researcher at the Center for Responsive Politics in Washington, D.C., which analyzes campaign-finance data, finds joint fundraising committees a bit frustrating. "Unfortunately, these committees make it very hard to track the money," he says.

Related Links:
The Federal Elections Commission
FEC Info
Center for Responsive Politics

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