Well, the Republican maverick and soft money are in the news again. Senator McCain, the so-called "Luke Skywalker" of campaign finance reform, culminated a six-year effort with his Democratic collaborator, Senator Russell Feingold, to pass in the U.S. Senate the most comprehensive campaign finance reform since the Watergate era.

A word like "comprehensive" makes this legislation sound, well, comprehensive. Indeed, words like this are only the beginning of this bill’s acclaim - phrases such as "wide-ranging overhaul," "sweeping reform," and "meaningful changes" have been used to describe the latest modifications in our generation-old campaign finance laws.

It will not become law until it is also passed by the House and signed by the President, but assuming its likely success, the McCain-Feingold bill, formally known as the Bipartisan Campaign Reform Act of 2001, will completely ban all soft money. So problem solved — John McCain saved our blessed democracy…right?

Not exactly. Senator McCain and his fifty-eight colleagues were able to pass something that looked like reform. Five days before the Senate passed McCain-Feingold, the Senate approved an amendment to double the amount an individual can give to a candidate from $1,000 to $2,000. The Senate also raised the limit an individual can give during an election cycle from $50,000 to $75,000. At first glance, this amendment appears rather benign. Individual contributions are still only a small fraction of the millions of dollars donated to political campaigns...right? Sorry, wrong again.

Hard money, or regulated campaign contributions, outweighed party soft money by a ratio of 4.4 to 1 in the 2000 elections. It is hard money that dominates the political landscape. The core of the McCain-Feingold bill is a ban on approximately one-sixth of the campaign dollar pie. Banning soft money is an important goal, but raising the $1,000 individual per-candidate, per-election contribution limit to $2,000 could completely offset any progress made by a soft money ban.

Hard money is not clean money. While many Americans make contributions to political campaigns because of their convictions, the bulk of hard money donations are often delivered with a wink and nod by the same wealthy donors who will later request some type of political access. According to Public Campaign, seven of every ten dollars collected by federal candidates from individual donors in the 2000 elections came from donors of $200 or more; 44 percent of these donations came from donors giving $1,000 or more. These contributors are not representative of the nation economically or demographically; they are wealthier, whiter and older than most Americans.

You Can’t Beat Hard Money

Without a doubt, early money is hard money. It means viability: if a candidate is able to accumulate early contributions, he or she will be able to convince potential contributors and political parties of their legitimacy. An increase in individual hard money limits will give wealthy contributors even more control over which campaigns are viable and which are not. Soft money is almost exclusively used to help campaigns that have proven themselves by accumulating large hard money reserves. A soft money ban might influence a few high profile races, but has little influence on the area where money matters most.

Early money can also be used as an intimidation tactic. Well-endowed candidates already use their large war chests to scare off potential challengers. This partially explains why only 30 to 40 congressional races in 2000 were classified by experts as competitive. Soft money is useless without hard money. Federal law requires that party soft money be spent in combination with hard money, roughly two hard dollars for every soft dollar. Additionally, hard money is more versatile than soft money. It can be used for any election expense, be it polling, advertisements or paying the electric bill at the campaign office.

And how about those career politicians who just won’t go away? Raising hard money limits will also exacerbate incumbency advantage and make it more difficult for quality challengers to run a competitive campaign. According to Public Campaign, Senate incumbents in the 2000 election raised on average nearly three times as much money from donors of $1,000 or more as their challengers. House incumbents raised nearly twice as much. Many are dubbing McCain-Feingold as "The Incumbency Protection Act of 2001."

The Reform that Deforms

High limits will reduce the role of small donors in elections. Considering that 99% of Americans make no political contribution or donate in amounts less than the current maximum, it is the wealthy few that will take advantage of the higher limits. This means smaller donors giving $200 or less will be further disadvantaged.

Donors giving a hard money contribution of at least $1,000 gave about $380 million to federal candidates in 2000. With the limit increasing to $2,000, these additional contributions could nearly compensate for the amount of party soft money, which amounted to $494 million, that will be banned by McCain-Feingold.

The $2,000 contribution size can be deceptive. As it currently stands, individuals are permitted to give $1,000 per election cycle — $1,000 for the primary and $1,000 for the general election — for a total of $2,000 dollars. Hard money, however, is often bundled in larger amounts than $1,000. Corporate executives, along with colleagues in their company and industry, often employ these bundling strategies when donating to political campaigns. Public Campaign has documented a case where 63 donors listing MBNA as their employer gave Senator Joseph R. Biden (D-Del.) a total of $47,250 over the period of just one month. Over the course of the entire election, Biden collected $130,175 in hard money contributions from MBNA National bank executives and their families. The nation’s largest credit card issuer clearly stood to benefit from the bankruptcy reform legislation recently approved by congress. Not surprisingly, Biden voted "yes" on the legislation when it came to the floor last month. It is not often that Congress is confronted with a bill that so directly affects itself. What have we learned so far from McCain-Feingold 2001? We have learned that most politicians are not committed to true reform and that today’s legalized system of bribery and corruption suits most members just fine. Many politicians deny that money is used to gain something tangible. Charles DeGaulle once said, "because a politician never believes what he says, he is surprised when others believe him." Let’s not be fooled by this legislation. The Campaign Reform Act of 2001 is only one piece of the puzzle. A bill that bans party soft money but doubles hard money easily fails to achieve even the minimum goal of reducing the number of cash constituents in today’s money buying politics. The hard truth about McCain-Feingold campaign finance reform is that it fails to address the most malevolent aspect of American government: hard money.
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