TIME: The Wake-Up Call (2/3/97)
What's Legal And Not In Non-U.S. Citizen Donations
The Current System
Concerned with the escalating costs of campaigns, lawmakers in 1974 passed legislation limiting individuals to $1,000 donations per candidate for federal office (capped at $25,000 per election) and making presidential campaigns, to an unprecedented extent, publicly financed. (The law also imposed spending limits on House and Senate races which the Supreme Court ruled unconstitutional in 1976).
To the national political parties, individuals can give $20,000 each year in what's called "hard money," funds that can be spent directly on a presidential or congressional campaign. Contributors can give unlimited amounts of so-called "soft money," donations to the political parties for party-building activities.
Presidential candidates who agree to abide by spending limits qualify for matching funds during the primary season, and primary winners are given funds for their general campaigns. This year, the Dole and Clinton campaigns each received $37 million in primary matching funds and roughly $62 million for their fall campaigns.
Campaign spending escalates
Despite regulations on giving, spending on Senate campaigns has continued to rise. House races typically cost about $500,000 with Senate races running into the tens of millions of dollars in larger states.
At the presidential level, public financing has not ended the money chase. The major parties have skirted spending limits by using millions of dollars in "soft money," for activities that few would deny help specific candidates.
According to Common Cause, Republican national organizations raised $75,853,472 while Democratic parties took in $65,126,376 in soft money from January 1995 through June 1996. The total for the 1996 election cycle could reach $250 million, three times more than in 1992. It's illegal to spend soft money in support of any particular federal candidate. In practice, though, the lines between party building and candidate promotion have blurred.
Along with the rise of soft money, there has been a proliferation of political action committees (PACs). Under current law, PACs (which are basically an association of people with similar interests) are permitted to contribute $5,000 per federal candidate per election. Critics say incumbents, uniquely situated to raise PAC funds in Washington, derive an unfair advantage over challengers.
While there is bipartisan agreement that soft money is used in ways that mock the law, and that PACs benefit incumbents, there is sharp disagreement over what reforms are required.
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