The Comeback of Political Soft Money

Hidden in the trillion dollar 1774 page spending cromnibus (continuing resolution and omnibus) bill pasted together by Congress to avoid yet another government shutdown was a provision that would see the amount of money that wealthy donors could give to national political parties increase by tenfold.  These donations would now go to fund presidential conventions, building infrastructure (i.e. offices and television studios) and legal work by the two political parties among other things.  In "Washington speak", this money is termed "soft money" and most of it comes from Corporate America, the one-percenters and labor unions.  In large part, it is these donations that "buy" influence in Washington.

Here is a chart showing how soft money donations to the national party committees grew over the decade from 1992 to 2002 from Open Secrets:

Until the 1991-1992 election cycle, the unlimited and unregulated soft money contributions to the national parties were not publicly disclosed.  Such unlimited donations were reigned in by the Bipartisan Finance Reform Act (aka the McCain-Feingold Act) after the 2002 mid-term elections.

As a bit of historical background, here is a chart showing the biggest soft money donors in the 2002 cycle to give you a sense of who was looking to influence Congress and the President:

Now, let's go back to the present day situation.  Right now, according to the law, donations to the Democratic National Committee and the Republican National Committee and their campaign affiliates are limited to $32,400 per person per committee per year as shown on this chart from the Federal Election Committee:  

Allowable contribution limits have been increased for inflation in odd-numbered years.

Now, comes the fun part for those who want to buy a politician.  Let's look at the current campaign contributions law, 52 USC 30116 with the key paragraphs highlighted:

"§30116. Limitations on contributions and expenditures

(a) Dollar limits on contributions

(1) Except as provided in subsection (i) and section 30117 of this title, no person shall make contributions-

(A) to any candidate and his authorized political committees with respect to any election for Federal office which, in the aggregate, exceed $2,000;

(B) to the political committees established and maintained by a national political party, which are not the authorized political committees of any candidate, in any calendar year which, in the aggregate, exceed $25,000;

(C) to any other political committee (other than a committee described in subparagraph (D)) in any calendar year which, in the aggregate, exceed $5,000; or

(D) to a political committee established and maintained by a State committee of a political party in any calendar year which, in the aggregate, exceed $10,000.

(2) No multicandidate political committee shall make contributions-

(A) to any candidate and his authorized political committees with respect to any election for Federal office which, in the aggregate, exceed $5,000;

(B) to the political committees established and maintained by a national political party, which are not the authorized political committees of any candidate, in any calendar year, which, in the aggregate, exceed $15,000; or

(C) to any other political committee in any calendar year which, in the aggregate, exceed $5,000."

Now, let's get to the proposed changes.  Here is the language of the Cromnibus Party Funding Rider which amends 52 USC 30116 with the key portions highlighted:

"SEC. 101. SEPARATE CONTRIBUTION LIMITS FOR CONTRIBUTIONS MADE TO NATIONAL PARTIES TO SUPPORT PRESIDENTIAL NOMINATING CONVENTIONS, NATIONAL PARTY HEADQUARTERS BUILDINGS, AND RECOUNTS.

(a) Separate Limits.—Section 315(a) of the Federal Election Campaign Act of 1971 (52 U.S.C. 30116(a)) is amended—

(1) in paragraph (1)(B), by striking the semicolon at the end and inserting the following: “, or, in the case of contributions made to any of the accounts described in paragraph (9), exceed 300 percent of the amount otherwise applicable under this subparagraph with respect to such calendar year;”;

(2) in paragraph (2)(B), by striking the semicolon at the end and inserting the following: “, or, in the case of contributions made to any of the accounts described in paragraph (9), exceed 300 percent of the amount otherwise applicable under this subparagraph with respect to such calendar year;”; and

By adding another paragraph to 52 USC 30116, we find the key to future fundraising by each political party since it establishes three "separate, segregated account(s) of a national committee of a political party" as follows:

1.) an account which is used solely to defray the expenses incurred during a presidential nomination convention.

2.) an account which is used to defray expenses incurred during the construction or purchase of a party headquarters and cover operating expenses.

3.) an account which is used to defray expenses incurred during the conducting of an election recount and other legal proceedings."

Here's the language of Paragraph 9 with the key portions highlighted:

"(9) An account described in this paragraph is any of the following accounts:

(A) A separate, segregated account of a national committee of a political party (other than a national congressional campaign committee of a political party) which is used solely to defray expenses incurred with respect to a presidential nominating convention (including the payment of deposits) or to repay loans the proceeds of which were used to defray such expenses, or otherwise to restore funds used to defray such expenses, except that the aggregate amount of expenditures the national committee of a political party may make from such account may not exceed $20,000,000 with respect to any single convention.

(B) A separate, segregated account of a national committee of a political party (including a national congressional campaign committee of a political party) which is used solely to defray expenses incurred with respect to the construction, purchase, renovation, operation, and furnishing of one or more headquarters buildings of the party or to repay loans the proceeds of which were used to defray such expenses, or otherwise to restore funds used to defray such expenses (including expenses for obligations incurred during the 2-year period which ends on the date of the enactment of this paragraph).

C) A separate, segregated account of a national committee of a political party (including a national congressional campaign committee of a political party) which is used to defray expenses incurred with respect to the preparation for and the conduct of election recounts and contests and other legal proceedings."

What this means is that wealthy individuals and groups could increase the level of their donations to each of the three accounts of each political party by 300 percent.   Under the proposed language of the bill, a donor could give $324,000 each year to the DNC or RNC along with donations to each of the separate, segregated accounts as noted above or as much as $3.1 million per couple per election cycle to the political party's various national committee accounts according to the Washington Post.  

Other than the obvious reasoning of raising additional money to fund election activities, there is a somewhat less obvious reason why Congress wants/needs this change made to campaign financing laws.  In the wake of the Citizens United decision in 2010, over the three most recent election cycles, the amount of money donated to and spent by Super PACS and political non-profits under under Section 501(c) has mushroomed as we can see on these two graphs:

The political party committees have seen their fortunes dwindle because donors are giving more money to these other political options.  

This provision will open the door to political influence-buying similar to what was seen back in the 1990s when the Democratic party offered sleepovers and coffee at the White House to donors who wrote hefty cheques to the DNC during the 1996 election cycle.