Chapter Four Contribution Limits: George Steinbrenner and Simon Fireman At the turn of the century, Republican money man Mark Hanna gained fame and political prominence for assessing formal contribution quotas on businesses. Banks were expected to contribute to the GOP one-quarter of one percent of their operating capital in order to do business with the government.1 Other large companies were treated the same way. Each was given a definite expectation as to what their contributions should be. It was an old-fashioned fundraising principle based on the ability to pay.
Not surprisingly, financial institutions and other large corporations eagerly complied with their quotas. National prosperity had increased dramatically in the decades following the Civil War, and the new business tycoons were more than happy to comply with Hanna's requests. After all, it made good business sense to help politicians in need of cash. The financial quotas made Hanna one of the most successful political fundraisers in the history of the country.
In the years that followed, numerous large contributors gave hundreds of thousands of dollars to particular candidates. Warren Harding, for example, ran one of the most corrupt administrations in U.S. history. Elected in 1920 as the 29th president, the Ohio native had been a compromise choice for his party. After three aspirants deadlocked at the national nominating convention, his party turned to Harding, and he was elected with more than 60 percent of the vote.
Although Harding was considered personally honest, many in his administration were not. His Secretary of Interior Albert Fall became intertwined in an embarrassing scandal known as Teapot Dome when it became known he had secretly leased federal oil reserves to business friends in return for personal gifts. A number of people within the administration went to jail and served long sentences on fraud charges.2
Similar rumors surrounding Lyndon Johnson. Early in his political career, Johnson was backed by oil interests and was given broadcasting license to build his personal assets. In his biography of the politician, Robert Caro documents how large and secret contributions turned Johnson from a dirt-poor politician into a wealthy man.3
General Motors heir Stewart Mott was legendary for his support of liberal, Democratic aspirants. He contributed $200,000 to anti-war presidential candidate Eugene McCarthy in 1968 and $400,000 to McGovern in 1972. Meanwhile, Chicago insurance magnate W. Clement Stone delivered nearly $3 million to Nixon in 1968 and $2 million in 1972. Conservative activist Richard Mellon Scaife donated $1 million to Nixon in 1972.
Overall, in 1972, 1,254 individuals donated over $50 million to political candidates, for an average of around $40,000 per contributor.4 While some of these individuals donated to a single candidate, others spread their largesse around to several different aspirants in order to hedge their bets. After all, if the goal was obtaining access, donors did not want to risk placing a bet on the losing candidate.
Until the infamous Watergate scandal exploded on the national scene in the early 1970s, this practice of wealthy people contributing large sums of money to political candidates was quite common. Indeed, it was part of the American culture for big money interests (so-called "fat cats") to finance individual politicians.
With Watergate, though, things changed radically in regard to large, cash contributions. Rather than being the norm, reformers made it illegal for wealthy individuals to contribute large amounts of money to a single candidate. New campaign finance rules imposed low limits on the size of campaign contributions as well as the overall amount of money contributors could donate to candidates in general. The goal was to eliminate the power of the rich to buy candidates and exercise disproportionate clout over public officials.
In the process, these changes brought about a tremendous revolution in campaign finance. Candidates were forced to develop new fundraising strategies, and groups and individuals who wanted to influence the political process had to alter their approach. Both groups and individuals had to spread their money over many different candidates and were limited to $5,000 and $1,000 gifts per candidate in each election cycle.
Slowly, over a period of two decades however, major loopholes developed in the kind and amount of political contributions which were allowed. Large, soft-money contributions to political parties have been legalized on freedom of expression grounds. Issue advocacy and independent expenditures allow wealthy interests to funnel unlimited amounts of money into the political process in ways that clearly run contrary to what the Watergate reformers had in mind.
We now are in a situation where the "fat cats" have returned with a vengeance. Millions can be spent on particular races as long as donors understand the money must be transferred in particular ways, such as through soft money party gifts, issue ads, or foundations and non-profits interested in the political process.
Unfortunately, with these gaping loopholes, we have reached a situation where there is a clear irrationality to contributor laws. Direct campaign contributions to candidates by individuals are limited to $1,000 per election cycle, while unlimited (and sometimes undisclosed) contributions are allowed to political parties. Both individuals and groups can spend any amount they want on independent expenditures or issue advocacy.
This schizophrenia pushes parties and candidates into creative end-runs around campaign finance laws, which exposes contributors to selective legal enforcement and punishment for white-collar crime. The hallmark of the American legal justice system is a law which provides clear guidance between wrong-doing and law-abiding behavior. Unfortunately, campaign finance rules no longer provide that kind of direction. Contributors face wildly different circumstances depending on how they give money and what jurisdiction they live in. Simply put, the law in this area has become unworkable.
This chapter examines this transformation in finance laws and explains why it is time to rethink the notion of contributor limits. With the rise of unlimited spending in the areas of soft money, independent expenditures, and issue advocacy, it makes little sense to continue to limit the direct contributions of donors to $1,000. These developments make a mockery of the legal system and heighten citizen and donor cynicism about the political process.
The Watergate Scandal
In his 1972 presidential campaign, Nixon raised nearly $60 million, which was more than twice that of his Democratic opponent, McGovern. Using the powers of incumbency, campaign operatives were enormously successful at attracting financial support for a variety of wealthy individuals and major business interests. Groups representing the dairy industry, ITT, airlines, oil companies, and defense contractors were among Nixon's largest donors, even though it technically was illegal for corporations to make political contributions.
Nixon fundraisers were so systematic in their efforts led by former Secretary of Commerce Maurice Stans that they revived Hanna's old practice of contribution quotas. Large companies were expected to donate at least $100,000, campaign officials made it known, if they wanted to receive favorable treatment from the Nixon White House. Similar to the Hanna days, corporations eagerly complied with the fundraising requests.
The only problem was that what they were doing was illegal. Following the election, 21 companies were found guilty of illegal contributions totaling nearly one million dollars. Among the companies prosecuted for making illegal gifts were Gulf Oil, Braniff Airways, Goodyear, 3M, and American Airlines.5
With so much cash flowing into the campaign, money was available for a variety of traditional and non-traditional activities. Owing back to his first successful presidential run in 1968, the biggest chunk of cash was spent on television advertising. Befitting the new media era that was emerging, Nixon placed heavy emphasis on direct communications with voters. They, after all, were the ultimate goal in the election. Persuading them took highest priority in the campaign.
However, using the large amount of dollars that were available to the president, Nixon staffers also turned to more creative enterprises. In order to exert maximum leverage on the electoral process, Nixon sought intelligence on possible opponents from Ted Kennedy and Edmund Muskie to the ultimate nominee, McGovern. If incriminating information or confidential strategy could be obtained, it could be used to discredit the opposition.
Hearing rumors about compromising information at Democratic National Committee headquarters housed in the Washington, D.C. Watergate complex, top White House officials authorized an illegal break-in at the DNC. The goal was to find any information that could be useful to the Nixon re-election effort, such as background information, material on the business dealings of candidates, and personnel files.
Funded by large, secret contributors, this effort typified the mentality in place in the campaign. The highly successful fundraising campaign allowed Nixon to pursue information options that in most races could not be afforded. In addition to the Watergate break-in, dirty tricks were planned against opposition candidates. Spies were placed in various campaigns to gather intelligence. Disruptions of Democratic rallies were encouraged. It was a well-planned, systematic, and highly coordinated operation.
Unfortunately for the Nixon White House, the Watergate burglars were caught red-handed by a late night security guard. Patrolling the hallways near the Democratic National Committee office, the officer noticed tape holding a door unlocked. Investigating the situation, he found the unauthorized men inside DNC headquarters. He immediately radioed the D.C. police, who came and arrested the burglars.
In the ensuing months, Nixon staffers downplayed the burglary and denied any knowledge of the activities. The "plumbers," as they were called, were operating independently and at their own initiative, according to the White House line. In what was to become one of his most famous quotes, Nixon Press Secretary Ron Ziegler condemned the break-in as a "third-rate burglary" that was unauthorized by Nixon.
Slowly, however, the conspiracy of silence that surrounded Nixon's secret campaign activities began to weaken. A curious judge named John Sirica and enterprising reporters at the Washington Post named Bob Woodward and Carl Bernstein pushed the investigation and eventually secret details began to emerge.
The break-in was not an isolated action. Indeed, it was part of a much larger operation designed to disrupt Democratic candidates and provide secret intelligence information to the Nixon White House for use in the presidential campaign. Not only were the activities organized on a massive scale, they were fully funded and coordinated by top Nixon staffers, including the president himself.
For months, Nixon continued to deny these facts and condemn the investigation as a witch-hunt. Unknown to investigators, though, Nixon had a secret taping system in the Oval Office which automatically recorded all conversations. As soon as the system was revealed, tapes were subpoenaed. The Supreme Court ordered the release of the tapes, which clearly demonstrated Nixon had been lying in his denials of any knowledge of the break-in, the dirty tricks campaign, and the resulting cover-up of the whole enterprise.
Facing the prospect of impeachment, Nixon resigned in August, 1974, humiliated by his efforts to undermine the democratic process. The year of unrelentingly negative press coverage had taken its toll. The president's job approval ratings had plummeted. With the revelation of the secret tapes confirming Nixon's participation in the illegal schemes, the president was left with the choice either of resigning or being impeached by the House of Representatives.
The entire scandal would lead to dramatic changes in our system of campaign finance and new efforts to deal with the complex problem of money and politics. What had loomed as a persistent failure on the part of the Congress to deal with fundraising problems turned to a revolution in finance rules. For the first time in American history, legislators systematically addressed the corrupting features of the American money machine.
When the full scope of Nixon's activities became known, both the general public and the Washington establishment were outraged. The president's dirty tricks campaign was the most organized effort to undermine American elections in this century. Featuring break-ins, spying, planting false information, and discrediting the opposition, it was about as fundamental challenge to representative government as our country ever had witnessed.
Taking advantage of public discontent, politicians resolved to undertake the most massive effort to clean up politics in the history of the United States. Reformers successfully persuaded Congress that a variety of changes should be implemented: contributions should be limited in size and disclosed to the general public, spending should be limited, presidential campaigns should be publicly financed, and a new federal agency be created to enforce election laws.
Spending should be limited in order to curtail the escalating costs of American campaigns and to place the parties on an equal footing. In preceding presidential elections, Republican nominees typically outspent Democrats by a two-to-one margin. This gave the GOP enormous advantages in the electoral process and allowed it to communicate twice as many messages directly to the American public.
Public financing was designed to reduce the power of contributions from private interests. Elections were considered so important as to warrant the spending of tax dollars. By matching contributions in the nominating process and featuring an all-public system in the general election, candidates would be in a stronger position to address collective interests unburdened by financial conflicts of interest.
The idea behind the contribution limit was that millionaires who gave large (and often times secret) contributions eroded public faith in government by creating the appearance and sometimes the reality of corruption. In a system that prided itself on the "one person, one vote" principle, big money gifts also ran smack into the equity principle. How, critics asked, could ordinary people trust government officials to do what is right when single individuals were giving them hundreds of thousands of dollars?
The power of this argument was so compelling to members of Congress that in 1974, they passed a landmark campaign finance bill that limited individuals to contributions of $1,000 per candidate in each election cycle. Political action committees affiliated with businesses and labor unions were allowed to give no more than $5,000 per candidate in each election. The hope was that this would remove the appearance of corruption from the American political system.
The George Steinbrenner Case
Almost immediately after these new rules were passed into law, a highly publicized test case came along. Taking advantage of the tough regulations on the size of contributions, federal officials in 1974 indicted George Steinbrenner, the flamboyant owner of the New York Yankees and president of American Ship Building Company. Steinbrenner was charged with money laundering for purposes of influencing the 1972 election between Nixon and McGovern.
According to the 14-count indictment filed against him, Steinbrenner gave bonuses to a number of employees and then ordered them to contribute a total of $100,000 to Nixon's campaign in their own names as well as provide gifts to the re-election efforts of Senators Daniel Inouye (D, Hawaii) and Vance Hartke (D, Indiana). In addition, the government accused Steinbrenner of "trying to influence and intimidate employees into lying to a grand jury" about the laundering once it became known in order to minimize his legal exposure.6
Government lawyers claimed Steinbrenner's actions were a clear and systematic effort to circumvent the new finance rules limiting contributors to $1,000 gifts. Initially, Steinbrenner pleaded not guilty and tried to contest the charges. However, in 1974 and as part of a plea bargain, the Yankee owner pleaded guilty to a felony and a misdemeanor. He admitted to violating the new campaign finance law and attempting to cover-up the effort.
For his admission, he was fined $15,000 personally and his company $20,000, but spared any jail time. For a felony plea that went to the heart of the new campaign laws not to mention the perjury charge, the fines were miniscule. What the case indicated was that though new rules were in place, enforcement would not be very aggressive.
To make this situation even clearer, two days before leaving office in 1989, President Reagan pardoned Steinbrenner for these crimes and restored full citizenship rights to him, including the right to vote.7 It was an ignoble end to the first major contributor enforcement action of the post-Watergate era.
Steinbrenner's case was not unusual. In 1976, his indictment was followed by a similar one involving businessman Armand Hammer. Accused of funneling $54,000 in illegal contributions to Nixon's 1972 campaign, Hammer pleased guilty and received no fine and a year's probation. Again, the message was unmistakable. Breaking the law would bring indictment, but the penalty amounted to little more than a slap on the wrist for rich people.
It was not only individuals who faced prosecution under the contribution limitations. A major business, American Airlines, was indicted for wiring money to an agent in Lebanon, supposedly for the purchase of aircraft. Instead, though, the cash was sent back to a U.S. bank, which then made a contribution to Nixon's re-election campaign.8 Faced with incriminating evidence, the company quietly settled the case and continued to do business with the federal government.
The Simon Fireman Case
Twenty years later, another investigation emerged on the national scene that would test the law on contribution limits. Simon C. Fireman, a wealthy Massachusetts businessman, was charged by the federal government for violating rules limiting individual campaign gifts to $1,000. Fireman was founder and chairman of Aqua-Leisure, an international distributor of swimming goggles, flippers, inflatable pool toys, and physical fitness equipment. Well-connected in national political circles, Fireman had served as director of the Export-Import Bank under Reagan, was Bush's national vice chairman for finance in 1992, and national vice chairman of finance for Robert Dole's presidential campaign in 1996.9
During an analysis of campaign contributions to Dole's election effort, the KansasCity Star newspaper found several unusual patterns. Between February and September, 1995, at least 40 workers at Aqua-Leisure made identical contributions of $1,000 to Dole's campaign. On February 28, 1995, 12 gifts from Aqua-Leisure employees arrived on the same day. Not only did top managers and salesmen make contributions, but individuals who worked as company secretaries, bookkeepers, and warehouse managers gave $1,000 donations to Dole. Copies of bank records revealed that "large amounts of cash flowed into contributors' bank accounts just before they donated" the money.10
Interviewed on national television, Dole immediately called for an official investigation. Appearing on the CBS news show "Face the Nation," Dole said, "It's an allegation that's been made and ought to be checked. If somebody did (make illegal donations), they're in deep trouble … they are going to have to suffer the consequences."11
According to the news accounts, Fireman's executive assistant, Carol Nichols, approached company employees with cash and asked them to make contributions to Dole. Several workers interviewed on the record denied being pressured to make a donation. Others claimed they had not been reimbursed by the company. Yet several employees contacted off-the-record contradicted these accounts and claimed employees were given "stacks of $100 bills and told to return with checks made out to 'Dole for President.'"12
Both the Federal Election Commission and the U.S. Department of Justice ordered an investigation. Not only was it illegal to funnel money through others and to excede the $1,000 individual contribution limit, individuals were prohibiting from donating more than $25,000 to a candidate in any calendar year.
By July, 1996, a plea bargain was reached between Fireman and the U.S. Attorney. Fireman pleaded guilty to evading the $1,000 contributor limit by funneling around $120,000 in cash to employees so that they could donate the money to various campaign organizations: $69,000 to Dole, $21,000 to Bush in 1992, $6,000 to Joseph Kennedy, and $24,000 to the Republican National Committee. These amounts were roughly comparable to the $100,000 in illegal contributions made by Steinbrenner in the 1970s. The Federal Election Commission later dropped its investigation into the matter.
According to court filings, company officials employed wire transfers from a Hong Kong company named Rickwood Limited and a secret trust established at a U.S. bank to send thousands of dollars into the secret U.S. account, which then could be distributed as cash in small amounts. After admitting his guilt, Fireman personally was fined $1 million, sentenced to six months of home confinement, and given two years of probation. His Aqua-Leisure company was fined $5 million and placed on probation for four years.13
During the home confinement, Fireman had to wear an electronic monitor, not work, do no entertaining, and use only a "jail-style phone" that was monitored and recorded, similar to that for inmates at the county jail.14 Visitors were allowed three times a week for no more than an hour at a time. No use of on-line computers was permitted.
Up until that point in time, this was the toughest sentence ever imposed in a contributor limit case. For example, in 1974, when Steinbrenner pleaded guilty to making $100,000 in illegal contributions and pressuring employees to cover up the crimes, his total fine was $35,000 with no prison sentence or home confinement. Hammer received no fine and no jail time. Previously, the highest penalty for funneling illegal contributions through company employees was $600,000 against Hyundai Motor America for donations to Representative Jay Kim of California.
In 1999, Democratic fundraiser Howard Glicken was fined $40,000 by the Federal Election Commission and $80,000 plus 18 months of probation and 500 hours of community service by a U.S. District Court for fundraising violations. In 1993, Glicken had raised money for the Democratic Senatorial Campaign Committee from a foreign national named Thomas Kramer and encouraged him to have someone else sign the check so as to conceal the illegal contribution. Kramer himself was fined $323,000 for making unlawful contributions totaling $418,600 in 1993 and 1994 to a variety of political candidates.15
In 1995, Dominic Saraceno, the treasurer of Alexander Haig's 1988 presidential campaign, was sentenced to four months of home confinement, two years of probation, and a $20,000 fine after he pleaded guilty to charges of lying to the Federal Election Commission when he denied knowing the Haig committee had been given illegal contributions. Saraceno had distributed $1,000 a piece to 46 employees for use however they wanted. Eight gave money to Haig's presidential effort, which helped the aspirant qualify for federal matching funds.
In the court filing, Saraceno "admitted that he had lied when he told the Federal Elections Commission that he was not aware of any improper contributions to the Haig campaign."16 Fellow businessman Donald Cooke Jr. was fined $500 after pleading guilty "to lying when he said he had not reimbursed his employees for their [Haig] contributions... [and] when he denied that Saraceno had asked him to say that."17
When asked why the Fireman penalty was so severe, U.S. Attorney Donald Stern indicated that it was due to "the elaborate lengths to which Mr. Fireman had gone to keep his scheme from being traced, steps that including wiring from Hong Kong the money that was to be distributed in cash to participating employees."18
Thomas Dwyer, lawyer for Fireman, proposed another explanation in a statement released the day of sentencing, two weeks before the election. "It is our feeling that Mr. Fireman was subjected to a penalty which resulted from the government's necessity to get a big fine in an election year….If this were not a political season, we believe the case would have been resolved for substantially less money."19
Although there was no indication the Dole campaign or any of the other organizations were aware of the money laundering, Clinton spokesman Joe Lockhart immediately put the case into the middle of the presidential campaign by strongly criticizing Dole. "It's now clear that there was criminal activity within the Dole campaign. Bob Dole needs to explain his relationship with Mr. Fireman [and] what role, if any, anyone in his campaign had in this illegal operation."20
Aware of their own political vulnerability on campaign fundraising, which would explode in the closing days of the race, Clinton staffers sought to tie Dole to Fireman in order to make it look like Dole had complicity in illegal fundraising.
During a Dole campaign trip through the Northeast, for example, when the Kansas criticized Clinton for illegal fundraising from foreign contributors, Lockhart jabbed Dole with the snide comment, "Bob Dole is in New England. Maybe while he's there talking about campaign finance, he can take time to visit his old friend Simon Fireman, if the parole officer will let him."21
It was a "spin" tactic the Clinton scandal machine would employ again and again against political foes.22 From Whitewater to campaign finance to impeachment, Clinton believed the best defense was a good offense against rivals. If the public doubts the messenger, it was unlikely to believe the message. Recognizing at some point that his own fundraising abuses would come to light, the president's managers sought to inoculate their boss against public perceptions that Clinton had broken the law in his own presidential campaign. After all, if everyone were doing it, there could be no political penalty from the public for any violation by another candidate.
The Current Irrationality in Contributor Limits
Between the Steinbrenner and Fireman cases over the past 20 years and everything in between them, there has been a growing irrationality in contributor limits. In the 1970s, there was a logic to campaign finance reforms that made some sense. It was important to restore equity to electoral competition so candidates were publicly financed and each party given the same amount for electioneering activities. Concerns about the corrupting power of big money led to low contributor limits and restrictions on the overall amount of money individuals could expend in any single year. Tough disclosure rules were put in place so that the public could see who was financing American campaigns. A strong agency, the Federal Election Commission, was created to enforce the law.
For a time, these rules appeared to work. Facing a cynical and disillusioned public following the Watergate scandal and Nixon resignation, candidates ran on trust themes and were cautious about how they raised and spent money. Dirty tricks were out and fair electoral competition was in. It was important to play by commonly-accepted rules and be seen as fair-minded by the general public.
Over the course of the past two decades, however, several trends have destroyed the original logic behind campaign finance reform. A series of court cases designed to resolve vagaries of the congressional legislation and the resulting Buckley v. Valeo Supreme Court decision opened gaping holes in legal enforcement. Emboldened by these rulings, both candidates and groups have become more aggressive at exploiting inconsistencies in the law.
Between the sharp increase in the number of campaign finance loopholes and changing patterns of candidate and group behavior, we now have a very different situation political in regard to money. In fact, we have reached a point in campaign finance where current rules are irrational at their core. Behavior that is condemned in one form is tolerated and practiced in another. Nothing illustrates this problem more than the law on contribution limits.
Contributors can donate hundreds of thousands of dollars in soft money contributions to political parties, which can be use to buy ads and assist the election of specific candidates. In 1996, for example, the Republican Senatorial Campaign Committee chaired by New York Senator Alfonse D'Amato routinely used soft money contributions to broadcast ads in individual Senate races that extolled or criticized the virtues of specific candidates. The ads were virtually identical to commercials broadcast by their own nominees. In some cases, they were produced by the same media consultants employed by the candidate in question.
In the 1996 presidential campaign, Dole was the object of ads paid for by the Republican National Committee outside of election spending limits that relied on identical footage and arguments as ads financed by his own campaign. The same was true for Democrats. Advertising consultants slid effortlessly between ads for candidates and independent commercials broadcast by the Democratic National Committee.
Current rules allow unlimited contributions on behalf of independent expenditures like Bush's "Weekend Passes" ad and issue advocacy campaigns of the type exemplified by the Christian Action Network. For example, if a group wanted to spend millions proclaiming the virtues of Elizabeth Dole or George Bush, Jr, it would be perfectly legal as long as they respected the maze of rules laid down in court cases. Independent expenditures cannot be overtly coordinated with the candidate's organization and issue ads cannot use the words vote for or against a specific person.
But despite rules tolerating unlimited spending in these areas, direct gifts to a candidate for federal office remain limited to $1,000 and total yearly donations to $25,000. Even though inflation has eroded the value of these contribution limits over the past two decades, these figures have not been raised since 1974, have not been indexed to inflation, and have not been altered in light of new political circumstances. It has created a legal situation that offers little coherence or fairness.
Not surprisingly, courts are starting to reconsider the constitutionality of the rules in this domain. For example, following a challenge to a 1994 Missouri law restricting contributors to $1,000 for an entire election, the Eighth Circuit of the United States Court of Appeals in St. Louis struck down the law on November 30, 1998. According to the judges, the limits were "so small that they run afoul of the Constitution by unnecessarily restricting protected First Amendment freedoms."23
The judges in this case, Nixon v. Shrink Missouri Government PAC No. 98-963, found using a campaign cost of living formula that the inflation-adjusted value of the 1976 $1,000 contributor limit would be $2,500 in contemporary terms. An appeal is pending before the U.S. Supreme Court as to whether the Buckley-imposed contributor limits are still constitutional in nature. Low courts have struck down limits of $100 per election in the District of Columbia and similarly low restrictions in Alaska, California, and Oregon on grounds that such low limits restrict freedom of speech.24
Since soft money contributions, independent expenditures, and issue ads fund virtually the same kinds of activities as direct candidate contributions, it makes little sense to fine someone millions of dollars for actions that are engaged in by dozens of individuals, corporations, and unions.
Indeed, vague and inconsistent rules lead to selective enforcement and unfair prosecution. Contributors can no longer be sure that their gifts will not expose them to white-collar crimes. Depending on what kind of donation they make, they are subject to wildly-varying laws. This, in turn, breeds cynicism among all involved.
In recent years, one of the fastest growing areas in campaign finance has been soft money contributions. Once an unknown part of elections, they currently are major parts of the election cycle. In 1996, Amway executive Richard DeVos and his wife contributed $1 million to the Republican National Committee. Tobacco company Philip Morris gave the Republican National Committee over $761,000 in 1997. Comedian Robin Williams gave $100,000 to the Democratic National Committee.25
These large contributions are merely tips of the iceberg. Dozens of large corporations and wealthy individuals have donated hundreds of thousands of dollars to the two party organizations. Once a rarity, such gifts now occur with surprising frequency.
In earlier eras, when the distinction between hard and soft money contributions was more substantial, limited hard money contributions and unlimited soft money rules were not as problematic. There were sharp differences in how the two kinds of money could be spent and how cash would affect the election process.26
However, in the current period, differences across types of contributions have become clouded and there are few rules distinguishing what can be done with soft versus hard money gifts. For someone who wants to respect the law, it virtually is impossible to justify current distinctions in campaign finance law. Soft money can be used to finance candidate activities, television commercials, and public opinion surveys. So can hard money, independent expenditures, and issue advocacy.
It makes no sense to have such a system of elections. Donors need clearer guidelines in order to avoid running afoul of the law. Rules must be precise enough that reasonable citizens can distinguish between actions that are lawful and those that are not. The irony is that penalties and fines have risen at exactly the time when the clarity of campaign finance rules has dropped dramatically. It is a legal situation that is dangerous for all.
1 Herbert Alexander, Financing Politics, 4th edition, Washington, D.C.: Congressional Quarterly Press, 1992, p. 12.
2 Francis Russell, The Shadow of Blooming Grove: Warren G. Harding in His Times, New York: McGraw-Hill, 1968.
3 Robert Caro, The Years of Lyndon Johnson: Means of Ascent, New York: Knopf, 1990.
4 Herbert Alexander, Financing Politics, 4th edition, Washington, D.C.: Congressional Quarterly Press, 1992, p. 21. Also see David Adamany and George Agree, Political Money, Baltimore: Johns Hopkins University Press, 1975.
5 Herbert Alexander, Financing Politics, 4th edition, Washington, D.C.: Congressional Quarterly Press, 1992, p. 18. Also for a history of campaign finance, see Frank Sorauf, Inside Campaign Finance, New Haven: Yale University Press, 1992.
6 Michael Goodwin, "Steinbrenner and 'Star Quality,'" New York Times, August 23, 1987, Section 5, Page 1.
7 Manny Topol, "George's Pardon Criticized," Newsday, February 5, 1989, p. 18 and Chicago Tribune, "Reagan Pardons Yanks' Boss," January 20, 1989, p. C14..
8 Herbert Alexander, Financing Politics, 4th edition, Washington, D.C.: Congressional Quarterly Press, 1992, p. 20.
9 Joe Stephens, "Pool-Toy Entrepreneur has History of Fund-raising for GOP," Kansas City Star, April 21, 1996, p. 1 and Anthony Flint, "Through Politics, Fireman Sought Identify," Boston Globe, July 22, 1996, p. A1..
10 Associated Press Newswire, "Mass. Company Made Payoffs for Dole Contributions," April 21, 1996.
American Political Network Hotline, "Dole: Wants Investigation of Illegal-Contribution Charge," April 22, 1996.
12 American Political Network Hotline, "Dole: Wants Investigation of Illegal-Contribution Charge," April 22, 1996 and Joe Stephens, "Pool-Toy Entrepreneur has History of Fund-raising for GOP," Kansas City Star, April 21, 1996, p. 1.
13 Fox Butterfield, "Ex-Aide to Dole Campaign Admits Illegal Contributions," New York Times, July 11, 1996, p. B10 and Joe Stephens, "Ex-Dole Aide to Plead Guilty," Kansas City Star, July 11, 1996, p. A1.
14 Joe Stephens, "Donor to Dole is Fined, Confined," Kansas City Star, October 24, 1996, p. A1.
15 Washington Post, "FEC Imposes $40,000 Fine on Democratic Fund-Raiser," January 24, 1999, p. A7.
16 Judy Rakowsky, "Pair Admit They Lied About Haig War Chest; Falsified Data Boosted Campaign," Boston Globe, January 31, 1995, p. 18.
17 Boston Globe, "2 Who Aided Haig in '88 Sentenced," April 25, 1995, p. 25.
18 Fox Butterfield, "Ex-Aide to Dole Campaign Admits Illegal Contributions," New York Times, July 11, 1996, p. B10.
19 PR Newswire, "Statement of Thomas E. Dwyer," October 23, 1996.
20 Fox Butterfield, "Ex-Aide to Dole Campaign Admits Illegal Contributions," New York Times, July 11, 1996, p. B10.
21 Richard Sisk, "Bill No Fall Guy, But Rakes in Dough," New York Daily News, October 21, 1996, p. 6.
22 Howard Kurtz, Spin Cycle: Inside the Clinton Propaganda Machine, New York: Free Press, 1998.
23 Linda Greenhouse, "After 23 years, Justices Will Revisit Campaign Limits," New York Times, January 26, 1999, p. A13.
24 Amy Keller, "Reed Plans Brief on Campaign Contributions," Roll Call, April 14, 1999.
25 Center for Responsive Politics, "Soft Money Special Release," February 4, 1998, World Wide Web address http://www.crp.org.
26 David Adamany and George Agree, Political Money, Baltimore: Johns Hopkins University Press, 1975.