NATIONAL POLITICS will survive the Shays-Meehan campaign finance reform bill, which passed the House last week and is likely to become law soon. If it curbs money in politics at all, the effect will probably be slight. And Republicans shouldn't be alarmed despite House Speaker Dennis Hastert's claim that Shays-Meehan could produce Armageddon for them. In truth, there's a better chance the measure will aid Republicans in winning the White House, Senate, and House than impede them.
But first consider what was averted: a sweeping reform measure. In 1994, both the Senate and House approved legislation imposing partial taxpayer funding of congressional elections and campaign spending limits, banning soft money, and putting draconian limits on independent issue ads. Only a clever Senate filibuster (blocking the appointment of Senate conferees to a House-Senate conference) engineered by Senator Mitch McConnell of Kentucky kept the bill from being signed into law. It was "a total government takeover of federal elections," says McConnell, the bete noire of campaign reformers. But it died.
Shays-Meehan pales in comparison. While it bans soft, or nonregulated, money, there are large loopholes. It clamps down on issue advertising but less severely than the 1994 legislation did. And it does what reform groups such as Common Cause, the liberal lobby, most abhor. It raises to $2,000 from $1,000 the limit on hard money, which goes directly to candidates and can be spent however they please. Also, the annual ceiling on hard money donations by a single individual increases to $95,000 from $75,000. Both increases are indexed for inflation.
So at best what reformers have won is a modest victory. And on what's most important in campaign finance--hard money--they've actually lost ground. In the broad scheme of federal elections, the reform movement is still far from achieving its ultimate goal of driving out all private money and having public financing for all federal election campaigns.
Things may get worse--or better, depending on your perspective. McConnell and a team of Republican election law experts are working up a lawsuit challenging the ban on soft money and the prohibition on independent issue ads within 60 days of an election. The latter is undoubtedly an unconstitutional limit on political speech and will probably be struck down. There's also a remote chance the federal courts will rule the soft money ban is a violation of the freedom of association. If both were tossed out, the result would be victory beyond the wildest dreams of Republicans: legislation that allows more hard money and does little else.
Let's examine the four most significant parts of Shays-Meehan--hard money, soft money, loopholes, issue ads--and see how they're likely to play out. The first is hard money, the mother's milk of GOP campaigns. The fundraising numbers for 2001 tell the sad story for Democrats, though the Republican and Democratic congressional campaign committees were not that far apart in collecting soft money. House Republicans had a 5-3 edge over Democrats in soft money but raised $40 million in hard money to $16 million for Democrats. In the Senate, Republicans raised $24 million in soft money to $23 million for Democrats, but the gap in hard money was far wider, $29 million for Republicans, $14 million for Democrats.
Why the GOP edge? A lot of it has to do with the base of the parties. For Republicans, it's Main Street, professional people, the well-to-do, and those who don't benefit from government programs. They tend to donate hard money. For Democrats, their base is union members, low income people, and to a lesser extent, a growing segment of the very wealthy. The poor don't have money to give, union members give through union dues, and the wealthy are chiefly a source of soft money donations. In short, Republicans have a built-in advantage on hard money. Democratic national chairman Terry McAuliffe says he'll work to overcome it, and he's as good a fundraiser as Democrats have ever had. But Democrats have been striving for decades to match GOP success in locating steady donors of hard money and have fallen woefully short.
On soft money, however, they've gained near-parity with Republicans. Corporations often split their donations between the parties, and Democrats have exclusive sources as well, such as Hollywood and trial lawyers. The trouble is Shays-Meehan ends soft money donations to the national parties. But because of loopholes, the situation is hardly hopeless.
The Congressional Black Caucus insisted on an amendment that permits members of Congress to raise money for nonpartisan groups, such as the NAACP. Both Republicans and Democrats are sure to exploit this. Instead of raising money for their parties, they'll now raise it for nominally independent groups allied with them on issues. In turn, these groups will finance TV issue ads that none-too-subtly boost GOP or Democratic candidates.
Another loophole lets individuals give $10,000 in soft money to state parties--all 50 of them, if the donor wishes--and to local parties, too. To exploit this, the national parties merely need to direct high-dollar donors to states where their candidates need help. No doubt they'll do this. And because of the two loopholes, the amount of soft money raised in 2003, the first year Shays-Meehan would go into effect, may decline little or not at all.
In an odd way, the legislation also helps Republicans on issue ads. In the 2000 presidential race, Democrats had a distinct edge in this area. The NAACP, Sierra Club, and abortion rights groups ran ads against George W. Bush, but there were few issue ads attacking Al Gore. With Shays-Meehan in effect, Republicans will not only raise soft money for conservative or other sympathetic groups, they'll do this with the expectation those groups will back them at election time with issue ads. As it stands, the legislation says only political action committees, which must register with the federal government and accept spending limits, can air issue ads in the final 60 days of a campaign. But it's unlikely the courts will accept such an affront to the First Amendment. The best guess is that issue ads will be legal and will flourish.
There's a final question about campaign finance reform. Why would Democrats support a measure that may hurt them politically and Republicans oppose a bill that may help? Ideology and the press play a role here. Democrats--the liberals anyway--believe a Washington free of the influence of corporations would be fertile ground for liberal governance. They think, John Podhoretz wrote in the New York Post, "the reason their wonderful ideas for controlling and managing America do not become law is solely due to rich people and corporations . . . get the money out and wonderful new regulations will flow." When the New York Times and Washington Post editoralize along these lines, they salute.
Republicans don't. Their animus against campaign finance reform stems from their view of government. Whatever can be done free of government control--elections, say--should be left in the hands of civil society or the private sector. What the media thinks leaves them cold. Shays-Meehan won't vindicate either. It won't change the campaign equation that much, but whatever impact it has should leave Republicans pleasantly surprised.
Fred Barnes is executive editor of The Weekly Standard.