Campaign-Finance Loopholes Widen

Questionable campaign-finance practices have reached an all-time high, as both Democrats and Republicans scramble to make the most of gaping legal loopholes that critics say threaten to end meaningful regulation of federal elections.

Experts in campaign finance say the current election season is unparalleled in the use of "creative" techniques to inject millions of dollars into key contests.

Critics say the mixing of big money and politics is undermining the integrity of the electoral process. They cite the current controversy over a $452,000 contribution by an Indonesian couple to the Democratic Party as an example of a campaign-finance system out of control.

But with the presidential and congressional campaigns in full swing, experts say both major parties seem intent on collecting and spending as much money as possible, regardless of the appearance that the democratic process itself is being offered up for sale.

"The new rule of 1996 is there are no rules," says Larry Sabato, a campaign finance expert and political science professor at the University of Virginia at Charlottesville. "The era of campaign regulation is over."

Gary Ruskin of the Congressional Accountability Project in Washington likens the current system of tattered regulations to a wedge of Swiss cheese. "When it comes to laws, there are more holes than cheese now," he says.

At the center of the campaign-finance debate is the use of "soft money," contributions that are routed through the political parties rather than directly to a particular campaign, where they would be subject to spending limits and disclosure requirements.

For example, under federal election laws the Clinton and Dole campaigns must abide by a $62-million cap on election spending. But that hasn't stopped the Democratic and Republican Parties from supplementing their candidates' campaign efforts with expenditures of their own.

Donald Simon, executive vice president of the watchdog group Common Cause, says that as of last April both parties had raised $140 million in soft money for use in supporting their candidates.

"All of this money is illegal under federal law, and it is being laundered through the political parties through the back door to affect federal elections," says Mr. Simon.

Ellen Miller, executive director of the Center for Responsive Politics in Washington, estimates that by the November election both parties will have funneled $250 million of soft money into the presidential campaigns alone.

The money includes contributions from corporations, wealthy individuals, unions, and lobbyists - most of whom are forbidden by election laws from making direct contributions to a presidential candidate.

Those regulations were aimed at preventing the election process from becoming swamped in special-interest money given by contributors who want to gain influence and access after a candidate is in office.

Party officials defend the practice of accepting and using the funds. US Supreme Court decisions, they say, establish that political parties have a First Amendment right to spend their money supporting the candidate of their choice.

Campaign finance experts say soft money and other loophole techniques are making a mockery of the spirit of federal election laws.

"We have a de facto deregulated system because the parties, the candidates, and the economic interests that finance the candidates have just blown by all the restrictions, and no one seems to have the will to stop them," says Ms. Miller. "It is all done with a wink and a nod."

The comments come as President Clinton and Democratic Party fund-raisers are under attack for accepting $452,000 in soft-money contributions to the Democratic Party from an Indonesian couple with ties to wealthy Asian financiers. Party contributions from foreign sources are illegal, but Democratic officials say the couple were residents of the US at the time the contributions were made.

Total contributions linked to the Lippo Group, an Indonesian-based conglomerate with interests throughout Asia in real estate, banking, securities, and insurance, have been estimated at $1 million.

Advocates of campaign finance reform say no candidate or party should accept such a large contribution from any single source, regardless of whether the source is foreign or American.

Sensing a possible campaign issue, Republicans are calling for an investigation by an independent counsel regarding alleged foreign contributions to the Clinton campaign.

Meanwhile, Common Cause is calling for an independent-counsel investigation of alleged campaign finance violations of both the Clinton and Dole campaigns during the presidential primary season.

The group says both campaigns participated in "the most massive violations of the campaign finance laws since the Watergate scandal."

In a 41-page letter to US Attorney General Janet Reno, Common Cause President Ann McBride detailed what she said were efforts by both campaigns to circumvent campaign-spending limits by shifting millions of dollars in excess of their campaign caps through national party committees rather than through their campaign committees.

The soft money - $22 million by the Clinton campaign and $9 million by Dole's campaign - was used to pay for political advertisements on TV during the presidential primary campaign, the group says.

"What you've got is a truly dramatic escalation in the amount of money that is being brought to bear on campaigns," says Common Cause's Simon. He says the list of suggested reforms is long, but members of Congress lack the political will to enact those reforms. "It is not so much a question of what do we do, as how do we get Congress to do it," Simon says.

Mr. Sabato, author of "Dirty Little Secrets," a book about campaign finance, suggests lifting all fund-raising bans. In return, candidates and parties should be required to disclose in detail the amounts and sources of all campaign funds, he says.