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For now, the McCain-Feingold campaign-finance reform act is still the law of the land. On May 19, a federal appeals court, after striking down several of its provisions, set aside its own objections until the Supreme Court rules on the law's constitutionality, probably sometime next year. That would put a final ruling just months ahead of next year's Presidential election.
Of course, the Supreme Court could throw out the appeals court's objections and declare the law fully intact. But few legal scholars expect that to happen. The high court could conceivably accept all or some of the appeals court objections, and add a few of its own.
The upshot: Fund-raising for the 2003-04 election cycle, with the White House and Congress up for grabs, will be conducted under two sets of rules -- under the current law this year and under any changes the Supreme Court ruling makes or leaves intact from the appeals court ruling next year.
What's the state of play for donors, the political parties, and the future of campaign-finance reform? BusinessWeek Online talked with campaign-law attorneys, reformers, and academics to assess what might unfold. Here, in question and answer form, is what we found out:
Q: What's the law today? A: The McCain-Feingold reforms, in effect since after the 2002 midterm congressional elections, govern political giving until the high court rules next year. The law does away with soft money, or unlimited donations, to political candidates or parties for bundling to groups or candidates or for party building.
Individuals can give $2,000 to particular candidates in the primary and $2,000 to candidates in the general election for a total of no more than $95,000 ($37,500 to candidates and $57,500 to parties and political action committees). PACs can contribute $5,000 to candidates or $15,000 to parties each year, with no overall limits. PACs never really gave soft money, however. Most soft money would come directly from companies or organizations.
Q: Who loses by sticking with McCain-Feingold for the time being? A: The Democrats. The party has been much more dependent on big soft-money checks from unions and fat-cat donors than Republicans, who collect the majority of their funds in smaller cash increments. The Democrats' disadvantage could be particularly debilitating in 2004 because of how well-funded President Bush's reelection campaign is likely to be.
Timing also will hurt the Democrats. Their nominee will probably be anointed at the beginning of March, after a short, brutal Presidential primary campaign in which a number of state contests are compressed into a short time frame. In all likelihood, that will leave the erstwhile nominee out of cash for four months. The nominee-in-waiting won't be eligible for public funding until the party's nominating convention at the end of July.
Bush, meanwhile, isn't expected to have a primary challenge, and his campaign is hoping to raise and spend at least $200 million -- a new record -- before the GOP convention in September. That will leave him with a huge cash hoard as the general election begins.
Q: So how will the parties get along without soft money? A: There are signs they might try to circumvent the ban through so-called shadow groups, which bill themselves as vehicles to support party candidates. For example, House Minority Leader Nancy Pelosi (D-Calif.) recently attended a fund-raiser for something called the New House PAC, which is considered a stand-in for the traditional vehicle for funneling largess to Democratic congressional candidates, the Democratic Congressional Campaign Committee. The PAC makes no secret of its plans to solicit soft money later this year.
What makes all PACs particularly valuable now is that they can ask their members to write checks to candidates individually. So, in addition to the $5,000 a PAC gives directly to a candidate, it can get 25 of its members to write checks for $2,000 to the same candidate, thereby multiplying its influence.
Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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