1a 

APPENDIX 

[Expert Report of Thomas E. Mann in 

McConnell v. FEC, 540 U.S. 93 (2003)] 

I. Qualifications 

My name is Thomas E. Mann. I am the W. Averell 

Harriman Chair and Senior Fellow at the Brookings 

Institution. I served as Director of the Governmental 

Studies Program at Brookings between 1987 and 1999 

and as Executive Director of the American Political 

Science Association from 1981 to 1987. I earned my 

Ph.D. in political science at the University of Michigan 

in 1977, specializing in elections, parties, public opinion, 

Congress, and American political behavior. A copy of 

my complete CV is attached. 

I have written or edited numerous books and articles on these and related subjects. I have taught at 

Princeton University, Johns Hopkins University, the 

University of Virginia, Georgetown University and 

American University and delivered invited lectures at 

many other colleges and universities and at scholarly 

meetings. I was elected a Fellow of the American 

Academy of Arts and Sciences and presented with the 

Charles E. Merriam Award (for “a significant contribution to the art of government through the application of 

social science research”) and the Frank J. Goodnow 

Award (for “distinguished service”) by the American 

Political Science Association. 

Over the last decade, much of my research and 

writing has focused on campaign finance in the United 

States and in other countries. In 1995, I assembled a 

Brookings Working Group on Campaign Finance Reform to evaluate alternative approaches to reform 

(Brookings 1996). I also started a campaign finance reform Web site at Brookings, which is regularly updated 
2a 

with materials on campaign finance law, administration, 

and politics (www.brookings.edu/campaignfinance). After the 1996 elections I joined several other scholars in 

analyzing the most serious problems with the campaign 

finance regulatory regime and in formulating a strategy 

to deal with those problems. We produced a report entitled “Five Ideas For Practical Campaign Reform,” 

which was widely circulated in the policy community 

(Ornstein et al. 1996). Based on this work, I took an active role in the public debate on campaign finance reform over the last six years. In 1997, I co-edited Campaign Finance Reform: A Sourcebook; in 2002, I coauthored a reformatted and updated edition of this volume, which is being published by Brookings as The 

New Campaign Finance Sourcebook. I have not testified as an expert at trial or by deposition in any other 

case within the last four years. 

II. Introduction and Summary 

My primary purpose in preparing this statement is 

to provide a description and analysis of the development of federal campaign finance law and practice leading up to the enactment of the Bipartisan Campaign 

Reform Act of 2002 (BCRA). I will briefly review the 

major laws passed by Congress to regulate the flow of 

money in federal elections during the first half of the 

20th century—most importantly the bans on corporate 

and union treasury funding of federal elections—as well 

as the central features of the regulatory regime defined 

by the 1974 amendments to the Federal Election Campaign Act (FECA). I will then discuss how that regime 

was undermined by the emergence of party “soft 
3a 

money”1 and of electioneering under the guise of issue 

advocacy. Finally, I will discuss how the collapse of the 

FECA regime has transformed the role of political parties, elected officials, corporations and unions in the 

electoral process and created glaring conflicts of interest and a widespread perception of corruption in the 

policy process. 

III. Early Legislative History 

Financing campaigns for federal office has been a 

concern of party and elected officials since mass suffrage emerged in the Jacksonian era of the 1820s and 

1830s. The need to communicate with a growing number of voters required parties to raise increasing 

amounts of campaign funds. For the next half-century, 

party leaders relied primarily upon an extensive patronage system for campaign money (Pollock 1928). 

But the passage of the Pendleton Civil Service Act of 

1883, which outlawed party assessments on federal officeholders, initiated the end of one political financing 

era and the start of another. Soon political parties 

turned to the private sector, particularly corporations, 

for campaign funds. By the election of 1896, under the 

direction of William McKinley’s legendary campaign 

strategist Mark Hanna, corporations were called upon 

to provide the bulk of campaign funds (Overacker 1932; 

Thayer 1973). 

 1

 Soft money is an informal term that refers to “nonfederal” 

funds raised by political parties outside of federal limits on the 

source or size of contributions and ostensibly used for purposes 

other than influencing federal elections. Hard money refers to 

federal funds raised, spent, and publicly disclosed according to 

terms set by federal law. 
4a 

Critics charged that corporations and other 

wealthy donors were corrupting government and gaining special favors in return for their campaign gifts. In 

1904, Democratic presidential nominee Alton B. Parker 

charged that corporations were providing President 

Theodore Roosevelt large campaign donations to buy 

influence with the administration. Roosevelt denied 

the charge but subsequently issued calls for campaign 

finance reform in his 1905 and 1906 messages to Congress. In 1907 Congress passed the Tillman Act, which 

prohibited corporations and national banks from making contributions in connection with federal election 

campaigns (Corrado 1997). 

Subsequent reforms were enacted to require disclosure of campaign receipts and expenditures (1910), 

to limit expenditures in federal campaigns (1911), to 

broaden disclosure and raise spending limits (1925), and 

to limit contributions to federal candidates and national 

political parties (1940). But in each case, Congress 

failed to establish an effective enforcement mechanism 

or to close obvious loopholes, rendering the practical 

consequences of the legislation much less significant 

than the stated objectives (Overacker 1932; Sorauf 

1988; Corrado 1997). Political parties remained the major financial intermediaries throughout the first half of 

the century, relying heavily on a relatively small number of large individual donors (Overacker 1932; Heard 

1960). 

The growth of organized labor as a political force in 

national politics led Congress in 1943 to enact a ban on 

union treasury contributions in federal elections comparable to the corporate ban in the Tillman Act. Because this measure was adopted as a war measure, it 

automatically expired six months after the end of the 

war. It was made permanent by the Taft-Hartley Act 
5a 

of 1947 and, like the ban on corporate donations, has 

been a permanent feature of federal election law ever 

since (Corrado 1997). 

The rise of television and the increasingly candidate-centered nature of federal election campaigns after World War II led to a substantial increase in campaign costs and growing concerns about political financing. But it was not until the early 1970s that Congress 

began to wrestle seriously with the shortcomings of the 

old system and the challenges of the new. The Revenue 

Act of 1971 created a presidential public financing system funded with an income tax check-off, but its effective date was delayed until the 1976 election. Congress 

also passed the Federal Election Campaign Act of 1971 

(FECA), which strengthened reporting requirements 

and repealed existing limits on contributions and expenditures that had proven ineffective. But it retained 

the ban on corporate and labor union contributions. It 

also put new limits on the amount candidates could contribute to their own campaigns and on expenditures for 

media advertising in presidential, Senate, and House 

elections (Sorauf 1988). 

The fundraising scandals associated with Watergate and the committee to reelect President Richard 

Nixon—featuring attaché cases stuffed with thousands 

of dollars, illegal corporate contributions, and conduits 

to hide the original source of contributions—led Congress to return to the campaign finance drawing board 

(Sorauf 1988). In 1974, they produced major amendments to FECA, which constituted the most serious 

and ambitious effort ever to regulate the flow of money 

in federal elections. 
6a 

IV. The FECA Regulatory Regime 

The 1974 amendments scrapped the 1971 limits on 

media advertising but replaced them with an elaborate 

set of limits on contributions and expenditures. The 

amendments also provided for public financing of presidential elections and created a new agency, the Federal 

Election Commission (FEC), to administer a strengthened disclosure system and to enforce the other provisions of the law. Barely a year after the 1974 amendments to FECA were signed into law, the Supreme 

Court in Buckley v. Valeo upheld the constitutionality 

of the contribution limits, disclosure requirements, and 

the presidential public financing system. But it struck 

down the limits on expenditures (by a candidate’s campaign, by a candidate with personal funds, or by others 

spending independently), except for voluntary limits 

tied to public financing in presidential elections, and 

narrowed the class of political communications by independent groups subject to disclosure and limits on the 

source and size of contributions. For the purposes of 

this report, two sets of provisions are particularly germane: those governing the role of corporations and labor unions, and those governing political parties. 

A. Corporations and Labor Unions 

The new regulatory regime included one very familiar element: a ban on corporate and union contributions and expenditures in connection with a federal 

election. FECA added some enforcement bite to these 

decades-old prohibitions by also making it unlawful for 

anyone to accept such contributions. Two exemptions 

from this ban were included in the law. The first, the 

press exemption, specified that the term “expenditure” 

does not include “any news story, commentary, or editorial distributed through the facilities of any broad-
7a 

casting station, newspaper, magazine or other periodical publication, unless such facilities are owned or controlled by any political party, political committee, or 

candidate.” The second, the internal communications 

exemption, permits corporations to communicate with 

their restricted class (i.e. stockholders and executive 

and administrative personnel and their families) and 

unions to communicate with their members without any 

limitations. Finally, while continuing the ban on the 

use of general treasury funds of corporations and unions in connection with a federal election, the new law 

allowed thse [sic] organizations to set up political committees as separate segregated funds. These funds, one 

form of political action committee (PAC), whose administrative and fundraising expenses may be paid for by 

their parent corporation or union, raise voluntary contributions from their restricted classes and are subject 

to federal limitations (Potter 1997). 

The intent of Congress as revealed by these provisions in the 1974 amendments to FECA was to ensure 

that corporate and labor union treasuries not be tapped 

to finance general federal election campaign activity. 

Decades of disappointing experience with earlier bans 

on corporate and union funding led not to a repeal of 

such bans but to a more rigorous regulatory strategy to 

make them enforceable. 

B. Political Parties 

The 1974 amendments to FECA treated political 

party committees as a type of “political committee” 

that is required to register with the FEC and is subject 

to federal limitations on amounts and sources of contributions. The latter included a prohibition on donations 

from corporations and labor unions. But party committees, as part of the official political party structure at 
8a 

the national, state, or local level, were treated differently than other political committees in several respects. Individuals could contribute up to $20,000 per 

year to national party committees and an additional 

$5,000 to a state party committee. Party committees 

could transfer unlimited sums to other party committees without such transfers being treated as contributions. The national committees of each party could together contribute $17,500 during an election cycle to a 

candidate for the U.S. Senate. And national and state 

parties could make limited “coordinated” expenditures 

on behalf of their federal candidates. The expenditure 

amounts varied by office and state population, and were 

indexed to inflation. 

With one exception, no reference was made in the 

law to different types and purposes of party accounts, 

one subject to the limitations of federal law, the other 

not. The text of the law includes no mention of “federal” or “nonfederal” accounts, much less “hard” or 

“soft” money. The sole exception to the law’s limitations on contributions to party committees was that 

donations to building funds of national or state parties 

were exempt. 

C. Groundwork for Soft Money 

As soon as these limits on party funding went into 

effect in the 1976 elections, two sets of concerns—

dealing with grassroots activity and the federal system—arose about the interpretation and impact of the 

law as it applied to political parties. The first—that 

traditional grassroots party activity was inappropriately and harmfully being subjected to limits on coordinated party spending—led Congress in 1979 to amend 

FECA. The 1979 revision is widely but inaccurately 

believed to have created soft money. Instead, soft 
9a 

money resulted from the response of the FEC to a second concern arising out of the federal system: how best 

to accommodate the fact that party organizations have 

roles in both federal and nonfederal election activity. 

1. The 1979 Amendments to the FECA 

One important feature of the 1979 amendments to 

the FECA was designed to allow state and local parties 

to spend unlimited amounts of funds raised under the 

act for grassroots campaign materials and activities. 

Much of the traditional party paraphernalia and volunteer activities was reduced in the 1976 elections on the 

presumption that the FECA required them to be 

treated as in-kind contributions from the parties to federal candidates and therefore subject to limits. Congress in 1979 narrowly defined three sets of electionrelated activities by state and local parties that were 

exempt from the limitations on party contributions to 

and coordinated spending on behalf of federal candidates. These included grassroots campaign materials 

(e.g. yard signs and bumper stickers), slate cards and 

sample ballots, and voter registration and get-out-thevote (GOTV) activities on behalf of the party’s presidential ticket. Congress specified that these exempted 

sets of activities did not include the use of any broadcasting, newspaper, magazine, billboard, direct mail or 

other general public communication or political advertising. Moreover, to qualify for these exemptions from 

limitations on contributions and coordinated spending 

by parties, funds for these exempt activities had to be 

raised in compliance with FECA. In other words, the 

1979 amendments did not authorize national party 

committees to accept unlimited contributions or to accept corporate or union treasury funds. They simply 

expanded the use that state and local parties could 
10a 

make of their federal (hard money) funds (Corrado 

1997a). 

2. FEC Rulings on Federal and Nonfederal 

Funds 

An entirely separate set of administrative actions 

was laying the predicate for national parties to begin 

raising funds not subject to federal source and amount 

restrictions. The FECA limited party financing of activities conducted in connection with federal elections. 

But what of state and local elections? Parties clearly 

have interests in elections for state and local office. 

Many state campaign finance laws are more permissive 

than federal law, allowing contributions from corporations and unions and higher or unlimited donations 

from individuals and PACs2

. (Some, albeit many fewer, 

are more restrictive.) To what extent do federal restrictions apply when party activities have an impact 

on both federal and state and local elections? The FEC 

began grappling with this question soon after it was established. In a series of advisory opinions, the Commission sought to ensure that a portion of state party 

activities benefiting both federal and nonfederal candidates be paid for with hard money. In Advisory Opinion 1975-21, the Commission ruled that a local party 

committee had to use hard dollars to pay for a part of 

its administrative expenses and voter registration 

drives, on the grounds that these functions have an indirect effect on federal elections. It used this opinion in 

regulations it issued in 1977 governing allocation of 

administrative expenses between federal and nonfed-

 2

 Table 1 summarizes the provisions of each state’s law governing contributions to political parties, based on information 

available from the Federal Election Commission as of 2000. 
11a 

eral accounts. The allocation was to be made “in proportion to the amount of funds expended on federal and 

non-federal elections, or on another reasonable basis” 

(11 CFR 106.1(e) 1978). 

The next year the Commission took an even 

tougher position on the use of nonfederal funds for 

voter registration and GOTV activities by party committees. In response to a request for guidance from the 

Illinois Republican State Central Committee, the 

Commission in Advisory Opinion 1976-72 approved the 

allocation of party overhead and administrative costs 

between federal and nonfederal accounts, based on the 

proportion of federal to state races being held that 

year. But it prohibited the use of nonfederal funds to 

finance such federal election-related activities as voter 

registration and GOTV: “Even though the Illinois law 

apparently permits corporate contributions for State 

elections, corporate/union treasury funds may not be 

used to fund any portion of a registration or get-outthe-vote drive conducted by a political party” (FEC AO 

1976-72). 

Less than two years later the Commission reversed 

its position. The Kansas Republican State Committee 

requested permission to use corporate and union funds, 

which were legal under Kansas law, to finance a portion 

of their voter drive that would benefit federal and state 

candidates. This time the Commission agreed, concluding in Advisory Opinion 1978-10 that expenses for voter 

registration and GOTV should be allocated between 

federal and nonfederal accounts in the same manner as 

party administrative costs. 

At this point the FEC rulings on party financing 

had been made in response to state party requests for 

guidance on how the financing of their traditional ac-
12a 

tivities was affected by the new federal election law. 

What emerged was that state parties had to maintain 

both federal and nonfederal accounts and allocate funds 

from the two accounts in a manner consistent with federal law. Direct assistance to federal candidates must 

be financed exclusively with federal funds. Comparable 

assistance to state and local candidates could be funded 

entirely with nonfederal funds. State party overhead 

and administrative expenses were to be allocated proportionately between federal and nonfederal accounts. 

Initially voter registration and GOTV were treated in 

the same way as aid to candidates—as a federal election 

activity requiring exclusively federal funds—but then 

the FEC reversed course and allowed state parties to 

allocate the costs of voter drives between the two accounts (FEC AD 00-95 2000). 

Soon national party officials argued that the Commission rulings recognizing federal and nonfederal 

state party roles and financing arrangements should 

apply to them as well. They contended that national 

parties assist candidates for federal, state and local office; that they work with state and local party organizations on a variety of party-building and campaign activities; and that, therefore, they too ought to be able to 

maintain separate federal and nonfederal accounts, finance their nonfederal election activity with nonfederal 

funds, and allocate administrative and other expenses 

for joint federal/nonfederal activities between the two 

accounts. The Commission agreed. In Advisory Opinion 1979-17, it stated that a national party committee 

could establish a separate account “for the deposit and 

disbursement of funds designated specifically and exclusively to finance national party activity limited to 

influencing the nomination or election of candidates for 

public office other than elective ‘federal office’” (FEC 
13a 

AO 1979-17). The Commission thereby permitted the 

national parties to raise corporate and union funds and 

solicit unlimited donations from individuals “for the exclusive and limited purpose of influencing the nomination or election of candidates for nonfederal office” 

(FEC AO 1979-17). 

V. The Rise of Soft Money 

Thus, at the same time Congress permitted state 

and local party organizations to spend unlimited 

amounts of federal funds on certain grassroots activities that benefited federal as well as state and local 

candidates, the FEC allowed parties (including national 

party committees) to pay for a share of the costs of 

these joint activities with funds not subject to federal 

limits. The convergence of these two regulatory 

changes set the stage for the solicitation and expenditure of so-called “soft money” in the 1980 election cycle. 

Soft money could be raised by national, state or local 

party committees, under limits, if any, set only by state, 

not federal law, and used to finance the ostensibly nonfederal share of the costs of these joint federal/nonfederal party activities. 

A. Developments in the 1980s 

The national parties quickly took advantage of this 

opportunity. They solicited funds for their nonfederal 

accounts from corporations, unions, and individuals who 

had already given the maximum amount permitted by 

federal law. The parties used these soft dollars to cover 

a portion of their administrative and fundraising costs 

as well as to finance a share of GOTV activities in 

states targeted for their presidential ticket or for crucial Senate races. The national parties often took the 

lead in raising the requisite amount of hard and soft 
14a 

dollars, which they then transferred to the state party 

committees that were conducting the voter drives 

(Alexander 1983; Alexander and Haggerty 1987; Alexander and Bauer 1991; Corrado 1997a). 

Soft money became an important part of national 

party finance beginning in the 1980 election. Just what 

amount of soft money activity the parties pursued in 

the 1980s is less certain. “Nonfederal” funds were not 

subject to federal disclosure requirements, only to the 

disclosure laws in states where soft money was spent. 

Many of these state requirements were nonexistent or 

ineffective. Thus, we have to rely on estimates of soft 

money activity in the 1980s rather than official reports 

of receipts and expenditures. Herbert Alexander, then 

director of the Citizens Research Foundation, is widely 

acknowledged as the most authoritative source of party 

campaign finance data during this period. Starting 

with the 1992 election cycle, when the FEC first began 

collecting and reporting data on nonfederal as well as 

federal accounts of national party committees, we can 

use official FEC data. Building on Alexander’s work 

and FEC data, Anthony Corrado has assembled the 

best available data on national party spending between 

1976 and 1998. I have updated his table with FEC data 

on the 2000 election cycle, added a column that computes soft money spending as a share of all national 

party spending, and reproduced it as Table 2 in this report. Chart 1 graphically displays the changes between 

1976 and 2000. Table 3 presents party hard and soft 

money expenditures adjusted for inflation. 

In 1980 the national Republican party spent 

roughly $15 million in soft money, the Democrats $4 

million. This constituted 9% of total spending by the 

two national parties. In 1984 the amount of soft money 

spent by the national parties increased marginally to 
15a 

$21.6 million but it constituted a smaller share (5%) of 

total national party activity. In 1988, however, that 

pattern was altered. Party soft money spending more 

than doubled to $45 million, which was 11% of national 

party totals, and the Democrats reached parity with 

the Republicans on the soft money side of the ledger. 

During this decade the national party committees 

explored the most efficient methods of allocating expenses between federal and nonfederal accounts and 

the most advantageous ways of spending soft money. 

The FEC approved alternative methods of allocation 

but gave party committees wide leeway in using “any 

reasonable basis” (11 CFR 106.1(e) 1978). Naturally, 

the parties found most attractive those allocation 

methods that allowed them to pay for as much of their 

expenses as possible with soft money. Priority in 

spending soft money was given to GOTV programs 

conducted by state party committees in presidential 

battleground states. The national parties also came to 

rely on soft money to cover an increasing share of the 

costs of their staff and operating expenses. By 1988, 

both parties had developed effective means of courting 

large soft money donors. After the election, Republicans revealed that they had received gifts of $100,000 

each from 267 donors; Democrats counted 130 donors 

contributing $100,000 or more (Alexander and Bauer 

1991). 

The rise of soft money did not go unnoticed or unchallenged. In 1984, Common Cause petitioned the 

FEC to issue new rules relating to the use of soft 

money, based on the charge that party committees 

were unlawfully using nonfederal funds to influence 

federal elections. The Commission denied the petition 

in 1986, but Common Cause challenged that denial in 

the U.S. District Court. The court rejected the group’s 
16a 

argument that no allocation method is permissible under FECA but agreed that the Commission’s policy of 

allowing state party committees to allocate expenses 

for certain joint activities on “any reasonable basis” 

was contrary to law. It directed the Commission to replace this permissive standard with more specific allocation formulas. As part of that directive, the court 

stated that the Commission could “conclude that no

method of allocation will effectuate the Congressional 

goal that all moneys spent by state political committees 

on those activities permitted in the 1979 amendments 

be ‘hard money’ under the FECA” (Common Cause v. 

FEC 1987). 

After an arduous rulemaking process and a return 

to the District Court by Common Cause with a petition 

for enforcement of the court’s order, the Commission 

issued new soft money rules in 1990, effective January 

1, 1991 (FEC 1990). The rules placed no restrictions on 

the sources or size of contributions to party nonfederal 

accounts, and they did not limit the amount of such soft 

money that could be spent. They did require all national party committees to file regular reports of their 

nonfederal receipts and disbursements with the FEC, 

and they required state party committees to report 

their soft money disbursements made in connection 

with federal elections. The regulations also replaced 

the “any reasonable basis” standard for allocating the 

costs of activities that influence both federal and state 

and local elections with a set of specific allocation methods. They also specified that the method to be used by 

party committees depended on the type of committee 

incurring the expense and the type of activity for which 

expenses were to be allocated. 

National party committees were required to allocate a minimum of 65% of their administrative and ge-
17a 

neric voter drive expenses in presidential election 

years to their federal accounts, 60% in nonpresidential 

years. For state and local parties, the allocation of 

these expenses was determined by the proportion of 

federal offices to all offices on the state’ s general election ballot. This provision produced a large range 

among the states in the percentage of hard money required, but the average was substantially lower than 

that applying to the national committees. Joint fundraising expenses for all party committees were allocated based on the amount of federal and nonfederal 

funds raised. The cost of party communications was 

allocated according to the relative time or space devoted to federal and nonfederal candidates. 

These soft money regulations effectively routinized 

the raising and spending of soft money by the national 

parties (Corrado 1997a). The FEC rules gave the parties explicit guidelines on how to spend soft money on 

activities that benefit federal as well as state and local 

candidates without risking an enforcement action. 

They also provided the national parties with ways of 

increasing the share of their costs that could be paid for 

with soft money. One such method—transferring federal and nonfederal funds to state parties to take advantage of more favorable allocation formulas—would 

become a major element of national party funding 

strategy in the years ahead. 

B. The 1992 Election 

It was no surprise, therefore, to see soft money activity proceed apace in the 1992 election. (Since this 

was the first election in which soft money contributions 

and expenditures were reported to the FEC, the soft 

money figures reported below for the 1992 election cycle and after are based on FEC data.) Spending almost 
18a 

doubled again over the preceding presidential election 

cycle, from $45 million to $80 million, although this time 

with the Republicans outpacing the Democrats. (See 

Table 2 for nominal figures, Table 3 for inflationadjusted figures.) Soft money as a share of total spending by the national parties jumped five percentage 

points to 16%. Both parties sought contributions of 

$200,000 or more from their top donors and put a high 

priority on soliciting corporate gifts. Table 4 lists the 

top 50 soft money contributors in the 1992 election cycle, with donations ranging from $206,207 to $1,374,500. 

(This table, as well as those reporting comparable data 

for the 1996 and 2000 election cycles, displays total 

amounts contributed and breaks those amounts down 

by party and by the percentage contributed from the 

organization’s treasury.) Three of the four congressional party campaign committees—the Democratic 

Congressional Campaign Committee (DCCC), the National Republican Campaign Committee (NRCC), and 

the National Republican Senatorial Committee 

(NRSC)[—]began to mount serious soft money operations. Together they raised more than $20 million in 

the 1992 election cycle. The fourth—the Democratic 

Campaign Committee (DSCC)—continued to raise soft 

money only for its building fund (Alexander and Corrado 1995). 

The national parties exerted firm control over the 

ways in which soft money was spent. The primary goal 

was to support the election of federal, not nonfederal, 

candidates. Barely $2 million of the $80 million in “nonfederal funds” spent by the national parties in the 1992 

elections was contributed directly to state and local 

candidates. The two national parties transferred almost $15 million to state party committees; each party 

directed two-thirds of its soft money transfers to ten 
19a 

presidential election battleground states. The bulk of 

these funds was used to finance voter identification and 

GOTV phone bank programs, typically according to a 

plan approved in advance by the national party. These 

voter mobilization activities benefited state and local as 

well as federal candidates in the targeted states, and 

state parties receiving these transfers were also able to 

use some of the funds to hire party workers, update 

voter lists, and pay for fundraising expenses. But the 

primary focus of these efforts orchestrated by the national parties was unmistakably the federal election 

(Alexander and Corrado 1995). 

Another major use of soft money in the 1992 elections was “generic” party advertising. These mostly 

television ads, run in key states to reinforce the message of the presidential candidates, were financed on 

the party-building rationale of the FEC’s allocation 

rules for joint federal/nonfederal activities. Around $14 

million was expended for this purpose. The ads did not 

mention the names of the candidates. (The assumption 

was that only hard money could be used for such candidate-specific ads, as part of the parties’ coordinated 

spending budget.) Instead they urged viewers to “Vote 

Republican” or “Vote Democratic” or stressed themes 

articulated in the presidential campaigns (Alexander 

and Corrado 1995). 

By the end of the 1992 election cycle, students of 

political parties and campaign finance came to recognize that important elements of party financing of federal elections were at variance with the FECA and 

with the initial rulings of the FEC that allowed the national parties to raise and spend soft money for limited 

purposes. Congress had sought to keep corporate and 

union money out of federal elections and to limit the 

size of individual contributions. Both objectives were 
20a 

undermined, however, by the growing role of soft 

money, which allowed national party officials and federal officeholders to solicit unlimited contributions and 

steer them in ways that would benefit their federal 

election campaigns. Initially, the Commission approved 

only the use of nonfederal or soft money accounts of the 

national parties “for the exclusive and limited purpose 

of influencing the nomination or election of candidates 

for nonfederal office” (FEC AO 1979-17). Yet later the 

FEC allocation rules allowed much more generous 

shares of nonfederal or soft money than could be justified by the state and local campaign activity they financed. Only a trickle of soft money was directly contributed to or spent on behalf of state and local candidates. Some soft money helped state party organizations mobilize support for state and local candidates 

and expand their staffs and activities. But a major 

share of these “nonfederal” funds raised by national 

parties was spent to influence the outcome of federal 

elections. Soft money had become primarily a component of federal election financing, not a means of funding state and local election activity (Alexander and 

Corrado 1995; Sorauf 1992). 

C. The 1996 Election Cycle: The Soft Money 

System Transformed 

The accommodative regulatory environment, the 

failure to index for inflation the FECA limits on contributions to candidates and parties, and competitive 

pressures in presidential elections combined to increase 

demand for soft money. Between 1980 and 1992, the 

parties became more adept at raising nonfederal funds 

from corporations, unions, and wealthy individuals and 

directing them toward locations and activities that 

would advance their presidential and congressional 
21a 

tickets (Alexander and Corrado 1995). But no one had 

yet questioned that there were still limits to what the 

parties could accomplish with soft money. While soft 

money was growing in importance, it remained a relatively small part of national party committee budgets. 

(See Table 2 and Chart 1.) 

The increased activity of the national parties during this period was largely accomplished with hard 

money. The parties adapted well to the new environment of modern campaigning and FECA financing, in 

important part by becoming repositories of professional 

expertise and building effective networks linking candidates with donors and consultants (Herrnson 1988). 

Relatively generous coordinated spending limits gave 

them license to provide substantial direct assistance in 

elections, financed by contributions raised under the 

FECA. It was clear that effective campaigning required a large component of candidate-focused communications. And that, everyone assumed, required hard 

money. 

1. Issue Advocacy 

That view changed in the next presidential election 

cycle, thanks to the audacious move by then President 

Bill Clinton and his political consultant, Dick Morris, to 

finance an ambitious political advertising campaign under the guise of “issue advocacy.” Starting in the fall of 

1995 and continuing through the middle of 1996, Democratic party committees spent an estimated $34 million on television ads designed to promote Clinton’s reelection. While the ads prominently featured the 

President, none of these costs were charged as coordinated expenditures on behalf of Clinton’s campaign. 

Instead the party paid the entire cost, based on a legal 

argument never before made: that party communica-
22a 

tions which did not use explicit words advocating the 

election or defeat of a federal candidate could be 

treated like generic party advertising and financed, according to the FEC allocation rules, with a mix of soft 

and hard money. Such communications were forms of 

issue advocacy, it was argued, and neither subject to 

the spending limits that apply to presidential candidates accepting public funding, nor wholly subject to 

the limits on the source and size of contributions to political parties (Green 1999; Corrado 2000). 

This argument, and the embrace of issue advocacy 

as a form of electioneering, had its genesis in Buckley. 

In that decision, the Court established an express advocacy test as a way of narrowing the scope of disclosure requirements and contribution limits for independent expenditures in light of a concern that the language crafted by Congress in the 1974 amendments to 

FECA was unconstitutionally vague and overbroad 

(Potter 1997a). The standard was defined by the Court 

as communications that “in express terms advocate the 

election or defeat of a clearly identified candidate for 

federal office.” The Court elaborated in a footnote examples of express advocacy, which became known as 

the “magic words” test. 

This express advocacy standard was constructed to 

determine which communications by individuals and 

groups independent of any candidate or party would be 

subject to regulation. The Court did not require express advocacy in candidate and political party ads for 

their financing to be subject to federal campaign finance laws. Buckley stated that spending by candidates and political committees (including parties) is “by 

definition, campaign-related.” Students of campaign 

finance thought it an extraordinary leap for a presidential candidate, especially one accepting public funding, 
23a 

and a national political party to argue that the express 

advocacy standard gave them license to craft and 

broadcast unlimited political ads and to finance them in 

large part with soft money (Green 1999; Corrado 2000; 

Citizens Research Foundation 1997; Mann 1999). 

2. Parties, Issue Advocacy and Soft Money 

The express advocacy standard had little noticeable 

effect on the conduct and financing of federal campaigns for almost 20 years after it was set by the Court. 

It took the creativity and bravado of Morris and Clinton and the failure of the FEC to challenge their use of 

party soft money to finance television ads promoting 

the President’s agenda and accomplishments to open 

the flood gates (Corrado 2000). In May of 1996, the Republican National Committee announced a $20 million 

“issue advocacy” advertising campaign. Its purpose, in 

the words of the chairman, would be “to show the differences between Dole and Clinton and between Republicans and Democrats on the issues facing our country, so we can engage full-time in one of the most consequential elections in our history” (Corrado 2000). 

These presidential candidate-specific ads, like the Democratic ones, were targeted on key battleground 

states and financed with a mix of hard and (mostly) soft 

money. Both parties were now financing a significant 

part of the campaigns of their presidential candidates 

outside of the strictures of the FECA and well beyond 

the bounds of the 1979 FEC ruling that national parties 

may raise corporate and union funds and solicit unlimited donations from individuals “for the exclusive and 

limited purpose of influencing the nomination or election of candidates for nonfederal office.” 

Very quickly the parties began to use the same 

funding strategy to campaign on behalf of their con-
24a 

gressional candidates; outside groups did likewise 

(Green 1999; Corrado 2000). For groups, the advantage 

of electioneering through “issue advocacy” rather than 

through FECA “independent expenditures” was that 

the former could be conducted without disclosure and 

could be financed with soft (i.e. unregulated) rather 

than hard money. This meant that both political parties 

and groups could solicit contributions from corporations 

and unions as well as from wealthy individual donors to 

finance candidate-specific electioneering communications. Moreover, those same corporations and labor unions could tap their own treasuries to run such electioneering communications themselves or through convenient, largely anonymous intermediary organizations. 

Research on the 1996 election revealed extensive and 

elaborate efforts by parties, candidates, unions, corporations and groups to exploit this new issue advocacy 

loophole to avoid the strictures election law (Annenberg Public Policy Center 1997; Green 1999; Corrado 

2000). 

This research also suggested some degree of coordination among parties, groups and candidates in creating and broadcasting these issue advocacy electioneering communications. Published accounts by former 

White House insiders and the report of the Senate 

Committee that investigated campaign finance practices in the 1996 election contain detailed information 

about President Clinton’s personal role in authorizing 

the “issue ad” campaign, editing the ads, selecting locations for their broadcast, and raising the funds needed 

to pay for them (Morris 1997; U.S. Senate Committee 

on Governmental Affairs 1998). Similar reports have 

been made of possible coordination between parties and 

outside groups regarding the strategic use of issue advocacy electioneering communications to shape the out-
25a 

come of federal elections (AFL-CIO v. Federal Election 

Commission 2001). The Supreme Court’s distinction 

between independent advocacy and advocacy coordinated with a candidate was critical to its finding that 

limits on independent expenditures were unconstitutional. Yet as issue advocacy emerged as a tool for 

electioneering communication in the 1996 election, it 

threatened to undermine a central feature of the 

FECA: that communications designed to help a candidate but not treated as contributions must be made independent of that candidate. 

3. Demand for Soft Money Intensifies 

The increased demand created by this novel interpretation of nonfederal election activity led to more 

than a threefold increase in national party soft money 

activity between 1992 and 1996—from $80 million to 

$272 million. (See Table 2.) Soft money as a share of 

total national party spending jumped from 16% to 30%. 

Both parties and their elected officials worked hard to 

solicit soft money donations from corporations, wealthy 

individuals, and labor unions. During the 1996 election 

the national party committees received nearly 1,000 

contributions from individuals in excess of $20,000 (the 

annual federal party contribution limit) and approximately 27,000 contributions from federally prohibited 

sources (Corrado 2000). Table 5 contains the top 50 soft 

money donors in the 1996 election cycle; their contributions ranged from $530,000 to $3,287,175. 

Less than $10 million of the $272 million was contributed directly to state and local candidates in the 

1996 cycle, only 3.5% of the soft money spent by the 

parties. The two parties transferred a total of $115 million in soft money to state party committees, which financed two-thirds of state party soft money expendi-
26a 

tures. The national Democratic party managed to finance two-thirds of its pro-Clinton “issue ad” television 

blitz by taking advantage of the more favorable allocation methods available to state parties. They simply 

transferred the requisite mix of hard and soft dollars to 

party committees in the states they targeted and had 

the state committees place the ads. State party soft 

money expenditures for political communication/advertising jumped from less than $2 million in 

1992 to $65 million in 1996 (La Raja 2001). State parties enjoyed positive spillover effects from this national 

party campaign strategy, in terms of covering some of 

their staffing and administrative costs. But there is no 

doubt that they were used by national party officials as 

vehicles for implementing their newly-developed strategy of federal electioneering under the guise of issue 

advocacy (Green 1999; Corrado 2000). 

After the 1996 election, the FEC audit division 

concluded that the party issue advertising campaigns 

should have been treated as campaign expenses of the 

two presidential candidates and thereby subject to 

spending and contribution limits. The Commission rejected the finding and unanimously declined to take any 

punitive action against the parties or their presidential 

candidates. The Commission also rejected the general 

counsel’s recommendation for an enforcement proceeding, based on the conclusion that the party’s issue ads 

were coordinated with the Clinton campaign and therefore constituted illegal campaign contributions and expenditures (Corrado 2002). What had seemed a daring 

test (if not outright violation) of the boundaries of federal election law in 1996 had now received the de facto 

blessing of the Federal Election Commission. There 

remained few effective constraints on the ability of parties and other political actors to campaign for and 
27a 

against specific candidates for federal office with unlimited amounts of soft money. 

D. The 1998 and 2000 Elections: A Regulatory 

Regime in Disarray 

The 1998 midterm election cycle saw the parties focus their soft money strategy on Senate and House 

elections. The total amount of soft money spent—$221 

million—was less than in 1996 but more than double the 

previous midterm election. And soft money as a share 

of total spending by the national parties jumped to 34%. 

(See Table 2.) The congressional party campaign committees put a premium on raising and spending soft 

money to advance the election prospects of their candidates. The two Senate campaign committees effectively abandoned formal coordinated expenditures on 

behalf of their candidates and delegated this financing 

tool to state parties. The DSCC made $12.3 million in 

coordinated expenditures in the 1994 midterm elections; that amount dropped to $8,424 in 1998. The 

NRSC spent $10.9 million of hard money in coordination with their candidates in 1994; the comparable 

amount in 1998 was $36,775. Both national party committees had discovered they could finance campaign activity on behalf of their senatorial candidates with soft 

money in the form of “issue advocacy.” The same pattern, more pronounced with the Democrats than the 

Republicans, was evident in the House campaign committees (FEC 1999). 

This was also the first election cycle in which scholars systematically monitored the issue advocacy campaigns of parties and groups, on television and on the 

ground (Krasno and Seltz 2000; Magleby 2000, 2000a; 

Krasno and Goldstein 2002). Anecdotal evidence had 

previously suggested little difference in purpose and 
28a 

content between express advocacy and candidatespecific issue advocacy communications financed by 

parties and groups. This research by political scientists 

soon confirmed that suspicion. The evidence of the explicit electioneering purpose of candidate-specific issue 

advocacy near the election was overwhelming. Such 

electioneering issue ads run by parties and groups were 

largely indistinguishable from the campaign ads of candidates. Very few candidate ads used words of express 

advocacy; virtually all party issue ads mentioned the 

name of a federal candidate, mostly in an attack mode, 

but few mentioned the name of the party; and almost 

every issue ad featuring the name of a candidate and 

running near an election was clearly designed to support or attack a candidate, not to express a view on an 

issue. Voters were unable to differentiate candidatespecific issue ads (broadcast and print) sponsored by 

parties and outside groups from campaign ads run by 

candidates. Parties and outside groups used issue advocacy as a cover to finance campaigns for and against 

federal candidates in targeted races. 

Given the breakthrough in the use of soft money to 

fund candidate-focused campaign ads in 1996, the 

FEC’s decision not to pursue this apparent violation of 

law and regulation, and the emergence of issue advocacy as the campaign weapon of choice in the 1998 congressional elections, it is no surprise that soft money 

financing of party campaigning exploded in the 2000 

election cycle. Soft money spending by the national 

parties reached $498 million, now 42% of their total 

spending. (See Table 2.) 

Raising a half billion dollars in soft money took a 

major effort by the national parties and elected officials, but they had the advantage of focusing their efforts on large donors. That focus paid substantial divi-
29a 

dends: 800 donors (435 corporations, unions and other 

organizations and 365 individuals), each contributing a 

minimum of $120,000, accounted for almost $300 million 

or 60 percent of the soft money raised by the parties 

(Rogers 2001). The top 50 soft money donors, displayed 

in Table 6, each contributed between $955,695 and 

$5,949,000. Among the many soft money donors who 

gave generously to both parties were Global Crossing, 

Enron, and WorldCom (Makinson 2001). 

The Republican and Democratic National Committees provided the soft and hard money needed to boost 

the campaigns of their presidential candidates in key 

battleground states. Electioneering issue ads were a 

central component of the political strategies of both 

presidential candidates and were fully integrated into 

the campaigns (Magleby 2002; Corrado 2002). One estimate based on monitoring television ads in the 75 

largest media markets between June 1 and election day 

suggests the parties spent $3 on issue advocacy communications in the presidential campaign for every $1 

they spent on express advocacy communications 

(Holman and McLoughlin 2001). Once again, the transfer of funds to state parties, which then placed the ads, 

provided the most efficient allocation method. 

The House and Senate party campaign committees 

were especially active in the soft money arena. Together they spent $219 million in 2000, more than ten 

times their soft money activity in 1992. As in 1998, 

they largely abandoned the hard money coordinated 

expenditure route to assisting their candidates and focused their campaign activity on issue advocacy and 

GOTV, both of which could be financed with a large 

portion of soft dollars. For the first time, the two Democratic campaign committees actually raised and 

spent more unrestricted soft money than regulated 
30a 

hard money (FEC 2001; Corrado 2002; Magleby 2002). 

Research monitoring national party campaign activities 

in the 2000 election cycle confirms a massive increase in 

party federal electioneering activities—over the air and 

on the ground—in targeted states and districts and financed largely with soft money (Krasno and Goldstein 

2002; Magleby 2002; Magleby 2003; Holman and 

McLoughlin 2001). 

A total of $280 million in soft money—well over half 

the amount raised by the six national party committees—was transferred to state parties, along with $135 

million in hard money. By contrast, the national parties 

contributed only $19 million directly to state and local 

candidates, less than 4% of their soft money spending 

and 1.6% of their total financial activity in 2000 (FEC 

2001). 

By the end of the 2000 election cycle, it simply was 

not credible to argue that soft money was exclusively 

or even primarily being used for state and local election 

activity. Nor was it credible to argue that “issue ads” 

run by national and state parties were anything other 

than communications intended to influence the outcome 

of federal elections. The evidence that national parties 

were raising soft money, not subject to federal limits, 

and using it by working through state parties to influence federal elections was decisive. The language in 

Buckley that spending by parties is “by definition, 

campaign-related” was given powerful empirical support. Scholars might differ about how best to change 

the campaign finance system, but they could not avoid 

the conclusion that party soft money and electioneering 

in the guise of issue advocacy had rendered the FECA 

regime largely ineffectual. 
31a 

VI. Potential Corruption of the Policy Process 

The developments in campaign finance law and 

practice reviewed in this report altered the behavior of 

private groups, political parties and elected officials in 

ways that raised serious concerns about potential corruption of the policy process. Those concerns led Congress to enact BCRA, which repairs the tears in the 

regulatory fabric and in many ways reinstates the campaign finance system in operation after the 1974 FECA 

amendments and Buckley. 

A. Corporations and Unions 

With the collapse of the firewall between corporate 

and union treasuries and federal election campaign activity, corporations and unions have assumed a financial 

role in the electoral process that is contrary to longstanding intentions of Congress. The FECA provided 

that corporations could participate in federal elections 

through voluntary PACs, internal communications with 

their shareholders and administrative employees, and 

individual contributions to candidates and parties from 

company executives. Each of these avenues of participation is well traveled. But corporations now draw directly on their treasuries to provide the largest share of 

soft money raised by both political parties, which in 

turn finances federal campaign activity (Makinson 

2001). They finance extensive “issue advocacy” electioneering communications, directly and indirectly 

through other groups, in targeted federal races (Krasno 

and Seltz 2000; Annenberg Public Policy Center 1997, 

2001; Holman and McLoughlin 2001). As a consequence, contrary to the objective specified in law by 

Congress as far back as 1907 and recodified and 

strengthened several times since, corporations today 

are major players in U.S. federal elections. And that, in 
32a 

turn, alters their relationship with those who hold and 

seek public office. 

Beginning in the 1940s, Congress acted to constrain 

labor union participation in federal elections in a manner similar to that for corporations. Unions can form 

voluntary political action committees. In fact, the Congress of Industrial Organizations (CIO) formed the first 

such political organization in 1943, shortly after Congress acted to ban unions from spending treasury funds 

on federal elections (Sorauf 1988). Perhaps most importantly, the internal communications exemption allows unions to allocate substantial resources from their 

treasuries to mobilize their members in key federal 

elections (Alexander and Corrado 1995). But like corporations, they now use treasury funds to make soft 

money contributions to political parties and to finance 

electioneering communications under the guise of issue 

advocacy. While unions overall provide a relatively 

small share of party soft money receipts, five individual 

unions were among the ten largest soft money donors 

in the 2000 election cycle. (See Table 6.) The AFL-CIO 

was one of the first nonparty groups in 1996 to seize the 

opportunity to broadcast electioneering ads under the 

guise of issue advocacy (Dwyre 1999); they continue to 

avail themselves of that opportunity today (Magleby 

2002). So labor unions too have taken a more direct 

role in federal elections than was traditionally contemplated by federal law. 

B. Political Parties 

Political parties play an indispensable role in democratic societies, aggregating public preferences, organizing teams of candidates and elected officials, and 

providing a means of democratic accountability. Political scientists have also traditionally valued parties for 
33a 

nurturing volunteer grassroots political participation, 

fostering broader electoral competition by supporting 

challengers to incumbents, and diluting the influence of 

organized interests. 

The rise of soft money has led many scholars to 

question whether these comparative advantages of political parties have been compromised by developments 

in campaign finance practice (Kelley 2002; Sorauf and 

Krasno 1998; Brennan Center 2001a; Mann 2002). Do 

parties dilute the influence of large donors, or facilitate 

their access to policymakers? Do parties operate independent of incumbent officeholders, or are they largely 

instruments of those incumbents? Does soft money 

support party-building and grassroots activities, or is it 

used primarily to finance communications about specific 

federal candidates? Are state parties independent actors in the soft money era, or are they more agents of 

national parties and politicians? While no scholarly 

consensus exists on the answers to these questions, the 

preponderance of evidence from recent research supports the position that the relationship between party 

soft money, private interests, and federal candidates 

and officeholders has created serious concerns about 

the integrity of the policy process and respect for the 

rule of law. 

Most importantly, soft money has led the parties to 

become the avenue by which elected officials and large 

private donors frequently come together. The national 

party committees are dominated by elected public officials—the president or presidential candidate in the 

case of the Republican and Democratic National Committees, the top House and Senate party leaders for the 

congressional campaign committees (Shea 1995; Dunn 

Tempas 1997; Sorauf and Krasno 1998; Corrado 2000; 

Dwyre and Kolodny 2002). There is no meaningful 
34a 

separation between the national party committees and 

the public officials who control them. As described 

above, the congressional party campaign committees 

have become very large soft money operations in recent elections. This party fundraising depends crucially 

on the active involvement of each party’s highestranking elected officials. As inducements for large contributions, policymakers grant access and provide opportunities for face-to-face discussions in intimate settings with the party’s most prominent public officials. 

Presidents and congressional party leaders devote a 

significant amount of their time to raising soft and hard 

money for their party committees as well as to assisting 

candidates directly. And top elected officials and their 

political strategists determine how party resources—

including importantly soft money—are allocated in 

presidential and congressional elections. 

Parties also provide an instrument for individual 

politicians to raise and spend funds for their own campaigns that would not otherwise be permissible by law. 

The final report of the Senate Committee on Governmental Affairs on the Investigation of Illegal or Improper Activities in Connection with 1996 Federal 

Election Campaigns chronicles the extraordinary 

lengths to which Democratic and Republican elected 

officials went to raise party soft money for their “issue 

advocacy” advertising blitzes in the 1996 election cycle. 

The tactic of choice for many 2000 Senate candidates 

was the “joint fundraising committee.” These candidate/party committees gave candidates an opportunity 

to solicit contributions, often from the same donor, for 

three campaign pots: up to $2,000 for the candidate’s 

campaign committee, an additional amount of up to the 

maximum of $20,000 for the party committee’s hard 

money account, and then any additional individual con-
35a 

tribution (or donation from a corporation or union) to 

the party’s soft money account. The latter two could be 

transferred to the candidate’s state party and used for 

issue advocacy or GOTV activities that would benefit 

that candidate’s campaign (Corrado 2002). 

Since the soft money-financed campaign activities 

of the parties must be mixed with some portion of hard 

dollars, the party committees also work assiduously to 

raise the requisite matches. Here too congressional 

party leaders have played a crucial role, by encouraging 

their colleagues in Congress, especially those representing relatively safe seats, to transfer funds from 

their personal campaign committees and leadership 

PACs to candidates in tight races and to party campaign committees. This encouragement has lately 

taken the form of party fundraising quotas on members 

of Congress. Federal election law permits unlimited 

transfers from members’ campaign committees to party 

committees. In the 2000 election cycle, 15% of the hard 

money receipts of the House party campaign committees came from member contributions (Malbin and 

Bedlington 2002). 

National party links to elected officials and large 

private donors are mirrored in their ties to state parties. Whatever the positive spillover effects on state 

party-building and voter mobilization (La Raja 2001; 

Ansolabehere and Snyder 2000), the evidence summarized above supports the conclusion that since the advent of soft money, national parties have used state 

parties primarily as vehicles for advancing federal election campaign objectives. The state parties have been 

willing partners with their national counterparts in 

seizing the opportunities presented by the soft money 

system to boost their federal candidates. “The relationship between the national parties and their state par-
36a 

ties has never been closer than it is today” (Morehouse 

2000). From a reform perspective, however, this means 

that any successful attempt to limit national party soft 

money activity must perforce prevent easy evasion 

through surrogates such as state and local parties. 

There are some who have argued that parties will 

be weakened by the elimination of soft money and that 

electoral competition will suffer (La Raja 2001). It is 

true that substantially more money is crossing party 

books and that they have a major presence in battleground states and districts across the country. But the 

evidence suggests that soft money has created as many 

or more problems for parties and done little to nurture 

grassroots participation or electoral competition (Brennan Center 2001; Magleby 2000, 2003; Corrado 2002). 

In fact, the period in which the party soft money system exploded has coincided with a decline in competition in congressional elections (Ornstein, Mann, and 

Malbin 2002). I am aware of no evidence supporting the 

proposition that party soft money activities counter or 

reduce the advantages of incumbency. This may be because the two parties—dominated by elected officials 

consumed with the immediate goal of winning the marginal seat that might determine which party controls 

the majority—concentrate their “issue advocacy” 

spending in the same handful of targeted contests 

rather than looking to the medium or long term by investing in a somewhat larger number of potentially 

winnable seats (Krasno 2003). The provision in BCRA 

increasing hard money contributions limits to parties 

will in any case cushion if not entirely match the absence of soft money. 
37a 

C. The Policy Process 

These new and altered roles in the electoral process 

for corporations, unions and political parties raise troubling questions about the integrity of the policy process. Congress banned corporate contributions in federal elections out of concerns that concentrated wealth 

and the advantages of incorporation could distort and 

corrupt democratic government. Labor unions were 

subjected to comparable regulation to neutralize the 

political benefits that might result from their publiclyfacilitated organizational strengths. Large and unlimited individual contributions were proscribed by Congress to prevent the buying of access to or special 

treatment by government officials. Yet each of these 

pillars of federal election law has been undermined by 

the rise of the soft money system and electioneering 

issue advocacy in U.S. elections. Very large institutional and individual donors have returned to Washington. 

No single motivation can possibly explain the behavior of all of these large soft money donors. Some 

enjoy being viewed as “players” in their parties; some 

hope to help one of the parties hold or gain the White 

House and Congress; some bank on better access, a 

more sympathetic hearing, or more favorable treatment from federal officials; others give defensively in 

response to aggressive solicitation by party and elected 

officials—a cost of doing business in Washington. But 

since most of the largest soft money donors had high 

stakes in decisions made by Washington policymakers, 

the public has a substantial basis for its concerns about 

conflicts of interest and corruption of the policy process 

(Magleby and Patterson 1994). 
38a 

Since the Supreme Court’s Buckley decision, corruption or the appearance of corruption has been the 

dominant legal rationale for regulating campaign finance. Scholars have sought to measure whether campaign contributions corrupt the policy process by buying votes in Congress. Most of this research has examined the connections between PAC contributions (a 

surrogate for interested money) and votes in the House 

and Senate (Sorauf 1992; Wright 1996). There is little 

statistical evidence that campaign contributions to 

members of Congress directly affect their roll call decisions. Party, ideology, constituency, mass public opinion and the president correlate much more with voting 

behavior in Congress than do PAC contributions. 

When these variables are less significant, there is evidence that interest group contributions, particularly to 

junior members of Congress, have influenced roll call 

votes—for example, on financial services regulation 

(Stratmann 2002). The targets of influence are less often victories on final roll-call votes than assistance, 

sympathy or access at some earlier stage of the legislative process (Hall and Waymann 1990). 

In any event, this literature is often used to buttress the argument that political contributions do not 

corrupt the policy process. This is an odd inference, 

since it is based on studies of contributions that are limited as to source and size for the very purpose of preventing corruption or its appearance. PAC contributions are capped at $5,000 per election, an amount 

whose real value has shrunk by two-thirds since it was 

enacted in 1974. Are we to assume that studies of contributions of $50,000 or $500,000 or $5 million from corporations, unions and individuals would produce the 

same generally negative findings? What if the route of 

influence is not through individual members or on roll 
39a 

call votes? What if large soft money donors give generously to both political parties? 

A more sophisticated understanding of the organizational features of Congress and of the multiple forms 

of political contributions leads one to take seriously the 

potentially corrupting effects of political contributions. 

Initial work along these lines suggests a myriad of 

ways in which groups receive or are denied favors beyond roll-call votes (Hall and Wayman 1990; Hall 1996; 

Beckmann and Hall 2002). Members can express public 

support or opposition in various legislative venues, offer amendments, mobilize support, help place items on 

or off the agenda, speed or delay action, and provide 

special access to lobbyists. They can also decline each 

of these requests. Beyond the chamber floor, venues 

include rules governing floor consideration, party leadership, party caucuses, standing committees and subcommittees, conference committees, and other collections of members inside the House and Senate. Groups 

may use their campaign contributions in conjunction 

with their lobbying operations to reinforce or activate 

rather than convert members. They may also try to 

curry favor by running helpful electioneering issue advocacy campaigns for or against particular federal candidates. Moreover, in the executive branch, influence 

can be sought over appointments and access to decision-making forums, as seen in recent revelations about 

the Enron Corporation. 

The currency of campaign contributions extends 

well beyond PAC contributions to members’ campaign 

committees. These include brokered if not bundled individual contributions, contributions to leadership 

PACs controlled by members, contributions to parties 

and candidates in targeted races and informally credited to members, soft-money contributions to parties 
40a 

and section 527 committees connected to members, and 

direct expenditures on “issue ad” campaigns. The ways 

and means of potential influence (and corruption) are 

much more diverse than those investigated in the early 

scholarly research. 

The dramatic growth of soft money and the intimate involvement of elected officials in raising and 

spending that money to influence federal elections 

makes that potential influence and corruption all the 

more serious. That potential for abuse is most vividly 

illustrated by the series of reports issued by the Center 

for Responsive Politics tracking patterns of soft money 

contributions by groups with a strong interest in pending legislation (Keen and Daly 1997; Corrado 2000). 

Prominent examples include the tobacco, telecommunications, and oil and gas industries. In each case millions 

of dollars in soft money contributions were made to the 

national and congressional party committees of both 

parties as Congress was considering legislation that 

would significantly affect those industries. These are 

only several of the most noteworthy examples of a 

widespread phenomenon: most corporate soft money 

donors have a major stake in federal policymaking and 

many contribute to both major parties. 

Seen from this practical vantage point, parties do 

not dilute the influence of large donors or insulate 

elected officials from direct connections with those donors; they instead facilitate and broker such connections. The rise of soft money and of electioneering in 

the guise of issue advocacy has put parties in the unfortunate position of middleman between large private interests seeking public favors and ambitious elected officials aggressively soliciting large political contributions 

from those private interests. The FECA and its legislative predecessors banning corporate and union fund-
41a 

ing of federal elections were designed to reduce the 

glaring conflicts of interests that arise when those with 

high stakes in congressional and regulatory agency actions make large political contributions. That purpose 

has been undermined by the developments reviewed in 

this report. 

Whatever the mix of motivations, parties, elected 

officials and private interests have been linked in a deceitful game—one based upon the transparent lie that 

soft money is being raised and used for purposes other 

than influencing federal elections. That game has been 

characterized by a constant search for funding conduits 

and rationales that allow political actors to evade the 

strictures of federal election law. It has exacerbated 

conflicts of interest among policymakers. It has encouraged politicians to engage in heavy-handed solicitation of large donations. And it has reinforced the unfortunate public perception that public policy decisions are 

bought and sold in Washington. 

VII. Conclusion 

This review of the development of campaign finance law and practice leads me to conclude that Congress had ample justification for crafting the provisions 

of BCRA to deal with the problems of party soft money 

and electioneering communications in the guise of issue 

advocacy. The weight of scholarly evidence supports 

the view that the FECA regime was undermined by 

the emergence of soft money and “issue advocacy,” 

raising serious concerns about potential corruption in 

the policy process and disrespect for the rule of law. In 

my view BCRA is an incremental step to repair these 

egregious tears in the regulatory fabric. The new law 

accomplishes this objective by updating existing provisions that limit contributions to political parties and 
42a 

that prohibit corporate and union treasury spending in 

federal elections to take into account contemporary realities of campaigning. 

I declare under penalty of perjury that the foregoing is 

true and correct. 

Executed on September 20, 2002

/s/ Thomas E. Mann 

Thomas E. Mann 

[Attachments and references omitted]
43a 

List of Tables and Chart 

Table 1: State Limits on Contributions to Political 

Parties by Donor, 2000 

Table 2: National Political Party Spending, 1976-

2000 ($ Millions) 

Table 3: National Political Party Spending, 1976-

2000 (in millions of constant 2000 dollars) 

Table 4: Top 50 Soft Money Donors in 1992 

Table 5: Top 50 Soft Money Donors in 1996 

Table 6: Top 50 Soft Money Donors in 2000 

Chart 1: Soft Money Spending by National Parties, 

1976-2000 
[Table 1 omitted] 

Table 2. 

National Political Party Spending, 1976-2000 ($ Millions) 

 Democrats Republicans Overall Spending 

Nonfederal 

Elec- (Soft) 

tion 

Federal 

(Hard) 

Nonfederal

(Soft) Total 

Federal 

(Hard)

Nonfederal 

(Soft) Total 

Federal 

(Hard) $ % 

1976 19.4 -- 19.4 40.1 -- 40.1 59.5 -- 0 1980 35.0 4.0 39.0 161.8 15.1 176.9 196.8 19.1 8 1984 97.4 6.0 103.4 300.8 15.6 316.4 398.2 21.6 5 1988 121.9 23.0 144.9 257.0 22.0 279.0 378.9 45.0 11 1992 171.9 32.9 204.8 256.1 47.5 303.6 428.0 80.4 16 1994 137.8 50.4 188.2 234.7 48.4 283.1 372.5 98.8 21 1996 214.3 121.8 336.1 408.5 149.7 558.2 622.8 271.5 30 1998 155.3 93.0 248.3 275.9 127.7 403.6 431.2 220.7 34 2000 265.8 244.9 510.7 427.0 252.8 679.8 692.8 497.7 42 
Sources: Anthony Corrado. Campaign Finance Reform. New York: Century FouPress, 2000, p. 70; Federal Election Commission, “FEC Reports Increase in Party Fundrai2000,” May 15, 2001. Figures for 1976 and for nonfederal spending between 1980 anare’estimates. All other figures are provided by the Federal Election Commission. 
46a 

Table 3. 

National Political Party Spending, 1976-2000 

(in millions of constant 2000 dollars**) 

Election Federal 

(Hard) 

Nonfederal 

(Soft) Total 

1976 180.1 -- 180.1 

1980 411.3 39.9 451.2 

1984 660.0 35.8 695.8 

1988 551.5 65.5 617.0 

1992 525.3 98.7 624.0 

1994 432.8 114.8 547.6 

1996 683.5 298.0 981.5 

1998 455.5 233.2 688.7 

2000 692.8 497.7 1190.5 

Sources: Anthony Corrado. Campaign Finance Reform. 

New York: Century Foundation Press, 2000, p. 70; Federal Election Commission, “FEC Reports Increase in 

Party Fundraising for 2000,” May 15, 2001. Figures for 

1976 and for nonfederal spending between 1980 and 1988 

are estimates. All other figures are provided by the Federal Election Commission. 

**Figures were converted into constant 2000 dollars 

using the “Inflation Calculator,” available at the Web 

site of the Bureau of Labor Statistics, http://www.bls 

.gov/cpi/home.htm. 
TABLE 4. 

Top 50 Soft Money Donors in 1992 

Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Af

Ind

Archer-Daniels-Midland 1,374,500 277,500 1,097,000 20 80 73 Atlantic Richfield Co 907,958 278,317 629,641 31 69 99 RJR Nabisco 875,305 346,000 529,305 40 60 100 American Financial Corp 840,000 0 840,000 0 100 100 Philip Morris 824,080 227,500 596,580 28 72 100 Joseph E Seagram & Sons 731,637 206,910 524,727 28 72 11 UST Inc 652,984 127,764 525,220 20 80 100 Merrill Lynch 645,900 160,800 485,100 25 75 83 International Marketing Bureau 

633,770 0 633,770 0 100 100 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Af

Ind

National Education Association 

445,052 437,302 7,750 98 2 100 

Time Warner 433,573 333,333 100,240 77 23 30 United Steelworkers of America 

409,876 409,876 0 100 0 100 

Kohlberg, Kravis, Roberts & Co 390,650 190,650 200,000 49 51 4 Chevron Corp 371,760 105,388 266,372 28 72 100 Goldman Sachs 350,320 101,800 248,520 29 71 25 Occidental Petroleum 349,030 114,950 234,080 33 67 97 MCA Inc 340,698 320,698 20,000 94 6 15 Sony Corp of America 332,650 232,650 100,000 70 30 77 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Af

Ind

Democratic Governor’s Association 331,574 331,574 0 100 0 100 Anheuser-Busch 329,280 221,200 108,080 67 33 100 American Intertrade Group 322,800 0 322,800 0 100 3 Tobacco Institute 292,202 152,275 139,927 52 48 100 Communications Workers of America 291,180 291,180 0 100 0 100 Limited Inc 288,600 41,500 247,100 14 86 100 MacAndrews & Forbes 286,700 146,700 140,000 51 49 100 Henley Group Inc 270,000 50,000 220,000 19 81 96 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Af

Ind

American Federation of State/County/Munic Employees 267,046 267,046 0 100 0 100 United States Surgical Group 265,200 22,800 242,400 9 91 100 Bechtel Group 262,797 133,450 129,347 51 49 93 Brown-Foreman Corp 260,449 0 260,449 0 100 100 IBM Corp 259,000 175,000 84,000 68 32 0 International Association of Firefighters 252,369 241,919 10,450 96 4 100 Bell Atlantic 252,325 92,625 159,700 37 63 100 Beneficial Corp 245,150 145,650 99,500 59 41 100 Forstmann, Little & Co 245,000 0 245,000 0 100 0 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Af

Ind

Morgan Stanley & Co 238,827 107,850 130,977 45 55 69 United Auto Workers 236,965 236,965 0 100 0 100 Lazard Freres & Co 236,500 216,500 20,000 92 8 15 Waste Management Inc 236,257 30,930 205,327 13 87 64 Sheet Metal Workers Union 232,000 232,000 0 100 0 100 Pacific Telesis Group 231,427 81,300 150,127 35 65 100 Progressive Corp 231,300 231,300 0 100 0 0 Mesa Limited Partnership 231,100 1,500 229,600 1 99 100 Connell Co 225,100 225,100 0 100 0 100 Cox Enterprises 219,074 219,074 0 100 0 13 National Housing Center 215,000 0 215,000 0 100 100 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Af

Ind

Coca-Cola Co 213,627 53,500 160,127 25 75 100 Axem Resources 210,200 210,200 0 100 0 0 Agenda for the 90’s 210,000 210,000 0 100 0 100 Walt Disney Co 206,207 206,207 0 100 0 24 Source: Based on an analysis provided by the Center for Responsive Politics on Septem2002. “Totals” include funds donated from organization treasuries and funds given by inals affiliated with the organization. 
Table 5. 

Top 50 Soft Money Donors in 1996

Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

New York Republican State Committee 

3,287,175 0 3,287,175 0 100 100 

Philip Morris 3,019,414 496,518 2,522,896 16 84 100 Joseph E Seagram & Sons 2,050,583 1,373,438 677,145 67 33 50 RJR Nabisco 1,442,931 254,756 1,188,175 18 82 100 California Republican Party 

1,350,000 0 1,350,000 0 100 100 

Walt Disney Co 1,347,000 1,043,050 303,950 77 23 99 Atlantic Richfield 1,262,031 486,372 775,659 39 61 100 Federal Express Corp 1,157,044 592,625 564,419 51 49 98 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Communications Workers of America 

1,150,300 1,150,300 0 100 0 100 

MCI Telecommunications 1,005,963 646,600 359,363 64 36 99 AT&T 1.000,024 447,184 552,840 45 55 99 American Federation of St/Cnty/Munic Employees 

958,462 958,462 0 100 0 100 

Republican Party of Florida 

934,746 0 934,746 0 100 100 

News Corp 869,700 75,000 794,700 9 91 69 Association of Trial Lawyers of America 

803,400 606,300 197,100 75 25 100 

MacAndrews & Forbes 779,649 639,649 140,000 82 18 94 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Anheuser-Busch 773,057 401,107 371,950 52 48 100 Time Warner 761,250 365,250 396,000 48 52 83 Lazard Freres & Co 759,956 595,106 164,850 78 22 0 Eli Lilly & Co 746,835 239,850 506,985 32 68 100 United Food & Commercial Workers Union 

733,771 733,771 0 100 0 100 

American Airlines 711,450 398,349 313,101 56 44 100 Chevron Corp 708,184 176,050 532,134 25 75 100 DreamWorks SKG 702,400 702,400 0 100 0 0 Archer-Daniels-Midland Co 701,000 295,000 406,000 42 58 91 Michigan Republican State Committee 

699,133 0 699,133 0 100 100 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Enron Corp 687,445 142,400 545,045 21 79 59 Goldman Sachs 666,075 472,500 193,575 71 29 5 Textron Inc 654,227 274,700 379,527 42 58 100 NYNEX Corp 652,802 240,347 412,455 37 63 100 American Financial Group 645,250 115,000 530,250 18 82 77 Brown & Williamson Tobacco 

642,500 7,500 635,000 1 99 100 

Laborers Union 634,588 627,088 7,500 99 1 100 Loral Space & Communications 632,500 601,500 31,000 95 5 0 Integrated Health Services 609,270 574,000 35,270 94 6 83 Northwest Airlines 608,900 352,400 256,500 58 42 70 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

American Defense Institute 600,000 0 600,000 0 100 100 UST Inc 595,592 68,862 526,730 12 88 97 Entergy Corp 592,371 295,000 297,371 50 50 98 Sprint Corp 585,732 409,609 176,123 70 30 100 Blue Cross/Blue Shield 578,793 139,635 439,158 24 76 99 PaineWebber 567,366 155,700 411,666 27 73 93 Freddie Mac 558,250 287,500 270,750 52 48 100 WMX Technologies 556,500 187,200 369,300 34 66 100 BankAmerica 554,329 192,939 361,390 35 65 100 Bristol-Myers Squibb 552,400 114,500 437,900 21 79 88 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Tobacco Institute 537,357 106,044 431,313 20 80 100 Travelers Group 535,410 200,349 335,061 37 63 80 Service Employees International Union 532,880 531,630 1,250 100 0 100 Milberg, Weiss et al 530,000 530,000 0 100 0 28 Source: Based on an analysis provided by the Center for Responsive Politics on Septem2002. “Totals” include funds donated from organization treasuries and funds given by indaffiliated with the organization. 
Table 6. 

Top 50 Soft Money Donors in 2000 

Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

American Fedn of St/Cnty/Munic Employees 

5,949,000 5,949,000 0 100 0 100 

AT&T 4,398,920 1,776,269 2,622,651 40 60 95 Service Employees International Union 

4,288,096 4,257,696 30,400 99 1 100 

Carpenters & Joiners Union 2,873,500 2,873,500 0 100 0 100 Freddie Mac 2,398,250 1,025,000 1,373,250 43 57 100 Philip Morris 2,383,453 296,541 2,086,812 12 88 100 Communications Workers of America 

2,355,000 2,355,000 0 100 0 100 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Microsoft Corp 2,317,226 966,792 1,318,384 43 57 75 United Food & Commercial Workers Union 

2,146,450 2,146,450 0 100 0 100 

Global Crossing 2,083,195 1,161,652 921,543 56 44 40 SBC Communications 1,862,228 876,621 985,607 47 53 100 Intl Brotherhood of Electrical Workers 

1,780,000 1,780,000 0 100 0 100 

Bristol-Myers Squibb 1,740,951 213,250 1,527,701 12 88 85 Enron Corp 1,671,555 532,565 1,138,990 32 68 70 American Federation of Teachers 

1,668,000 1,668,000 0 100 0 100 

MGM Mirage 1,563,086 713,086 850,000 46 54 100 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Pfizer Inc 1,558,817 160,000 1,398,817 10 90 99 Citigroup Inc 1,509,010 763,806 745,204 51 49 86 Saban Entertainment 1,496,000 1,496,000 0 100 0 21 National Rifle Association 1,489,222 0 1,489,222 0 100 100 Verizon Communications 1,473,451 573,800 899,651 39 61 99 Williams & Bailey 1,365,000 1,365,000 0 100 0 42 FedEx Corp 1,327,600 475,478 852,122 36 64 100 Loral Spacecom 1,291,800 1,291,250 550 100 0 0 American Financial Group 1,280,000 620,000 660,000 48 52 12 Sheet Metal Workers Union 1,255,854 1,255,854 0 100 0 100 Buttenwieser & Associates 1,252,500 1,252,500 0 100 0 0 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

MBNA Corp 1,235,905 200,000 1,035,905 16 84 60 Ness, Motley et al 1,230,500 1,230,500 0 100 0 100 Vyyo Inc 1,207,500 1,207,500 0 100 0 0 Angelos Law Offices/ Baltimore Orioles 

1,197,900 1,172,900 25,000 98 2 22 

Fannie Mae 1,188,650 610,800 577,850 51 49 96 Credit Suisse First Boston 1,185,450 443,000 742,450 37 63 36 Vivendi Universal 1,172,238 640,219 532,019 55 45 60 Lockheed Martin 1,152,350 457,500 694,850 40 60 100 Amway/Alticor Inc 1,138,500 0 1,138,500 0 100 32 Goldman Sachs 1,133,350 757,250 376,100 67 33 5 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Slim-Fast Foods/Thompson Medical 

1,113,000 1,093,000 20,000 98 2 2 

Blue Cross/Blue Shield 1,104,415 236,250 868,165 21 79 100 Limited Inc 1,080,100 300,000 780,100 28 72 88 United Parcel Service 1,072,871 . 195,662 877,209 18 82 100 America Online 1,061,205 452,750 608,455 43 57 35 Milstein Properties 1,044,515 1,044,515 0 100 0 0 UST Inc 1,041,570 53,000 988,570 5 95 99 American International Group 

1,036,760 554,010 482,750 53 47 100 

Association of Trial Lawyers of America 

980,200 974,850 5,350 99 1 100 
Organization Total ($) Total to Dems ($) Total to Reps ($) % to Dems % to Reps % from Treasury % 

Aff

Indi

Anheuser-Busch 968,281 413,256 555,025 43 57 100 Metabolife 963,000 558,000 405,000 58 42 100 AFLAC Inc 961,325 453,000 508,325 47 53 100 GlaxoSmithKline 955,695 80,900 874,795 8 92 99 Source: Based on an analysis provided by the Center for Responsive Politics on Septem2002. “Totals” include funds donated from organization treasuries’and funds given by inals affiliated with the organization. 

 
65a