Campaign finance in age of DeLay

Charges against the Texan could expose loopholes - or legal complexities.

If nothing else, the recent indictments of Rep. Tom DeLay (R) of Texas offer a window into the difficulties of limiting the flow of money into politics.

Looked at from one point of view, the DeLay case shows how complicated campaign-finance law has become, and how easy it may be to commit violations.

From another, it may illustrate how easy it might be to circumvent current restrictions - and push fundraising tactics to the edge of legality.

"You're never going to stop it all," says Larry Noble, executive director of the Center for Responsive Politics, a campaign finance watchdog group. "It's a question of keeping it under some control."

For Representative DeLay, the first legal blow landed last week, when a grand jury empaneled by Travis County District Attorney Ronnie Earle indicted him on criminal conspiracy charges.

In line with GOP rules, DeLay stepped down from his post as Majority Leader when the indictment was issued.

Then on Monday a new grand jury issued a new indictment charging DeLay with the far more serious crime of money laundering - a first degree felony.

All the charges stem from a Texas ban on the use of corporate money for state and local elections. Prosecutors allege that DeLay and his associates got around this ban by transferring $190,000 in corporate donations from a Texas political action committee to the Republican National Committee in Washington - and then getting $190,000 back from the RNC in individual contributions for GOP Texan state candidates.

It's not clear why Mr. Earle felt it necessary to press for the second round of indictments. So far he has declined to explain his strategy. DeLay has heatedly denied all the allegations, calling them politically motivated, and his lawyers had challenged the original indictment on technical grounds. "Ronnie Earle ... is trying to pull the legal equivalent of a 'do-over' since he knows very well that the charges he brought against me last week are totally manufactured and illegitimate," Delay said Monday.

Yet for all the bill's new limits on direct contributions to campaigns, the elections of 2004 set new money-raising records. The new environment also spawned pioneering money efforts, such as 527s, interest group entities that attempt to skirt federal funding rules and named after a section of the tax code.

By all accounts, DeLay has thrived in Washington's money-raising environment. He has founded more than a dozen campaign cash organizations, including his crown jewel national political action committee, Americans for a Republican Majority. ARMPAC has donated more than $3.5 million to GOP candidates since 1998, according to public campaign records.

DeLay has personally helped reap millions more for Republicans via personal appearances and other efforts. On the fundraising stump he is a star - a consensus pick as the party's second most-effective fundraiser, after President Bush.

DeLay's particular innovation has been the K St. Project, an effort he founded to convince lobbying firms to hire Republi-cans when they had open slots. The point: make the money machine self-sustaining, as GOP lobbyists would at least theoretically be more prone to continue to donate to their old party.

"The K St. Project really changed some of the fundamental rules of the game," says Center for Responsive Politics' Mr. Noble.

Whether they stick, the DeLay indictments appear to have altered some fundamental rules of fundraising. They have convinced at least one GOP lawmaker to return DeLay-provided cash. Rep. Jeb Bradley (R) of New Hampshire said last week that he would give back a $15,000 donation he received from ARMPAC.

The larger question is whether DeLay's legal troubles will have an effect on the flow of money into politics. Some experts think that might happen - at least for a while.

In particular, the DeLay indictments, combined with Mr. Bush's falling polls, have at least raised the question of whether the Republican Party can hang on to the House in the 2006 elections. That's bound to affect campaign contributions, says Thomas Mann, a senior fellow at the Brookings Institution in Washington. "I think corporate and trade association reps - to say nothing of CEOs - will be more careful in responding to Hill pressure to play only one side of the aisle," he says.

But recent experience has shown that clever lawyers can find a way around many attempts to stifle the flow of money into politics, Mr. Mann points out. "Whether this has any long-term impact depends on whether a party or presidential candidate seizes the opportunity to elevate political reform as a campaign and governing issue," Mann says.