Soft money is a loophole that has developed in recent years to provide candidates, contributors and political parties a means to evade federal contribution limits. "Soft" money is money that is illegal under federal law - it either violates federal source restrictions (such as money from corporations) or federal limits such as large contributions from individuals in amounts sometimes exceeding $100,000.
Federal law prohibits corporations and labor unions from contributing any money to federal campaigns. Federal law also limits an individual to contributing no more than $1,000 to a federal candidate per election, and no more than $20,000 to a political party per year.
To evade these restrictions, soft money contributions are given by individuals, corporations, unions or others directly to designated non-federal accounts of the national political parties. The national party committees then transfer the money from these accounts to the state parties. The state parties then spend the money on activities such as voter registration drives or get-out-the-vote drives that benefit candidates in federal elections.
This means the soft money contributions are laundered through the political parties in a way that allows federally illegal money to nonetheless be used to influence federal elections.
Soft money is a scandal. This loophole has given a rebirth to the kinds of huge individual and corporate contributions in the political process that have not been seen since Watergate.
In the first half of 1995, the Republican party raised a record $20 million in soft money, of which $7.8 million came in contributions of more than $50,000. The Democrats raised $10.5 million, of which $5.3 million, more than half, came in contributions in excess of $50,000. One company - Amway - gave a single contribution of $2.5 million to the Republican Party last year.
Soft money has thus become not only big business for the political parties, but a primary means special interest can now use to buy access and influence. The tobacco industry, for instance, which is under attack in Washington, gave a total of $1.5 million in soft money contributions to the Republican Party in the first half of 1995. One company - Phillip Morris - alone gave almost $730,000 in this six month period.
They ban it. Very simply, the bills require that any money solicited or received by the national political parties must comply with federal law. So too, any money spent by the state parties on any activities which might influence federal elections - including voter registration and get-out-the-vote drives - must comply with federal law. And any money raised by a federal candidate or federal officeholder must comply with federal law. These three provisions, taken together, will close the corrupting soft money loophole.
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