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Notebook: Oh, How Campaign Donations Talk

Time cover

Verbatim

"The institution I'm going to...is co-educational, and I think there's an excellent chance I might get to see Hillary there."
JIM MCDOUGAL, former business partner of the Clintons, on KATV in Little Rock, Ark.
"Let me get this straight. If you commit adultery, you can't be Chairman of the Joint Chiefs of Staff but you can be Commander-in-Chief."
DAVID LETTERMAN, CBS's Late Show

The Scoop

The White House: Do as I say, not as I do

(TIME, June 23) -- Even as the President last week was sweet-talking big Democratic Party donors into pledging $250,000 each, the Clinton Administration was readying a new feint on the campaign-finance front: trying to reverse the Supreme Court's landmark 1976 ruling, Buckley v. Valeo, which held that limits on candidates' spending infringe on their free speech. Last fall Clinton boosted his efforts to pass the McCain-Feingold bill that would curb soft money and give candidates cheap TV time, but now it's pretty much dead. Two weeks ago, he asked the Federal Election Commission to ban soft money by regulation, a request most reformers regarded as only a gesture. The Justice Department is now eyeing some pending cases from the Midwest, hoping one might be the ticket to persuade the court that unbridled spending is so corrosive to democracy that its First Amendment absolutism is outmoded. Court watchers say it's a long shot at best.

--By J.F.O. McAllister and Karen Tumulty

Campaign Fund Raising: The Buck Never Stopped Here

Haley Barbour can't say he wasn't warned. The former Republican Party chief had hoped to partly finance a G.O.P. think tank that he had founded and chaired--the National Policy Forum--with foreign cash in 1993, but was waved off by its president. "It would be wrong to do so," wrote Michael Baroody in a confidential memo obtained by TIME. Barbour nevertheless lined up Hong Kong collateral for a $2.2 million loan to the Forum. The money helped free up funds for the successful Republican assault on Congress in 1994, and it aided the party again two years later when the Hong Kong guarantor absorbed $500,000 of the unpaid balance. Senate investigators are now trying to determine whether the Forum was used to launder foreign campaign funds. The controversy was foreshadowed in the memo by Baroody, who explained he was resigning partly over Barbour's "fascination" with foreign sources of funding. Baroody wrote that while the think tank's bid for nonprofit tax status required it to distance itself from partisan activities, staff members felt the group was "operated like a division" of the Republican National Committee. He cited examples of R.N.C. intervention to underline his "concern that separation between [the Forum] and R.N.C. is a fiction." A Barbour associate told TIME that all rules for nonprofits were strictly observed and that Baroody's caution on foreign cash was not heeded because nonprofits can legally raise overseas funds. Barbour voluntarily gave Senate investigators Forum documents dealing with the loan, but not Baroody's memo.

--By Michael Weisskopf





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