Court upholds 'soft money' ban

Divided justices Wednesday affirmed key parts of campaign-finance law, the most important such decision in nearly 30 years.

Campaign finance reform has won a major victory at the US Supreme Court. In a ruling with important implications for the character of American politics, the high court Wednesday upheld the most significant portions of the so-called McCain-Feingold campaign finance reform law.

Although the decision arrives less than a year before the 2004 presidential election, it is not expected to cause major disruptions in the campaigns of either President Bush or his Democratic challengers.

That is because the reform law has been in full effect since November 2002, and the candidates and their political parties have already altered their fundraising strategies. While analysts are divided on the impact of the 300-page ruling, all agree it is the most important campaign finance decision since the landmark 1976 opinion Buckley v. Valeo.

"The idea that the parties have been starved for money, that the Democrats are being [harmed] in this process, is nonsense," says Norman Ornstein, a political expert at the American Enterprise Institute. "The system has operated in perfectly reasonable fashion."

Larry Sabato, a political scientist at the University of Virginia, disagrees. "Overall, [the campaign-finance law] is a joke," he says. "Every dollar that would have been given will be given under the new system," he says. "So what have reformers accomplished? They've weakened the parties and essentially transferred the flow of political money from one stream to another."

In an important victory for reform advocates, the justices placed a constitutional seal of approval on the centerpiece of the legislation - a ban on "soft money" in federal elections.

"The government interest underlying [the soft-money ban] - preventing the actual or apparent corruption of federal candidates and officeholders - constitutes a significantly important interest to justify contribution limits," writes Justices John Paul Stevens and Sandra Day O'Connor in a joint majority opinion. "That interest is not limited to the elimination of quid pro quo, cash-for-votes exchanges," they write, "but extends also to undue influence on an officeholder's judgment, and the appearance of such influence."

That portion of the opinion was joined in its entirety by Justices David Souter, Ruth Bader Ginsburg, and Stephen Breyer.

The same lineup of justices also upheld the other key provision of the 2002 Bipartisan Campaign Reform Act (BCRA), which established restrictions on corporations, unions, and advocacy groups from spending their general treasury funds to finance "electioneering communications" aimed at influencing a federal election.

The majority justices said the provision did not violate the First Amendment rights of the parties to participate in core political speech. "The provision is a regulation of, not a ban on, expression," they said.

Reform advocates say the electioneering communications measure is necessary to prevent wealthy special interests from dominating the air waves with "sham" issue ads prior to an election.

In the high court's landmark 1976 Buckley v. Valeo decision, the justices said corporations and unions could be barred from placing election advertisements but only when they involved "express advocacy" for a particular candidate. Corporations and unions interpreted the restrictions to mean that as long as their ads did not use magic words like "Vote for Smith" or "Throw out Jones," their issue-oriented ads - even ads critical of a particular candidate - would enjoy the full protection of the First Amendment.

No more. The majority justices declared that the express advocacy restriction established in the Buckley decision was a mere product of statutory interpretation by the high court, not a constitutional command. They abandoned it because, they said, it created a loophole that had been widely exploited.

"Buckley's express advocacy line ... has not aided the legislative effort to combat real or apparent corruption, and Congress enacted BCRA to correct the flaws it found in the existing system," Justices Stevens and O'Connor write.

The ruling comes as a result of lawsuits filed by more than 80 individuals and groups - including both major political parties - seeking to overturn the law. A range of campaign-reform groups and lawmakers supportive of the law urged that it be upheld. A federal court panel in May upheld parts of it and struck down others. But that decision was stayed, allowing the law to remain in effect pending the high court review.

In upholding the soft-money ban, the court said Congress did not violate constitutional safeguards in prohibiting national political parties, federal candidates, and federal office holders from soliciting or receiving funds other than those raised in compliance with federal source and amount limitations.

Money collected under those limitations is referred to as hard money. Money raised outside the regulated process for campaign finance is called soft money. Party receipts of soft money increased from $19 million in 1980 to $496 million in 2002.

As part of its ruling upholding the soft-money ban, the high court also upheld requirements that state political committees be barred from using soft money to finance activities related to elections with federal candidates on the ballot.

Mr. Ornstein says benefits of the finance law are already been seen. "We're not getting the same kinds of shakedowns of big donors from parties and candidates, selling of access by government officials," he says. "Are they going to find loopholes? Of course they will," he says. Ornstein, who helped draft key parts of the law, says the law wasn't meant to be perfect. "It was a pragmatic attempt to put some broad boundaries around the system."

One of the few measures struck down was a provision banning political contributions from minors. It was an attempt to prevent parents from funneling excessive campaign contributions to a party or candidate by using their children's names. The court said the provision violates the First Amendment rights of minors.

• Linda Feldmann contributed.