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What is Soft Money?
Soft money, also known as non-federal contributions, refers to political donations that do not go directly to any candidate’s campaign. These kinds of contributions do not have any limits, can come from individuals, companies, unions, or other groups, and are largely unregulated. While legislation has eliminated soft money from our elections, that does not mean it has completely prevented limitless and anonymous spending.
Does this give undue advantages to wealthy donors? Can this rig elections and the economy?
From the Federal Election Commission (FEC)
Before the Bipartisan Campaign Reform Act of 2002, political parties could pretty freely spend soft money on ‘party-building activities’ (e.g. party rallies, TV advertisements, etc.). The vagueness of the term matched the lack of regulation of soft money. As you might expect, the difference between party building and supporting federal candidates often felt nonexistent.
The Zero Theft Movement is dedicated to eradicating the rigged parts of the U.S. economy in order for the healthy, ethical parts to thrive. In this article, we examine the history of soft money to ask the question: does big money still have an influence in U.S. elections?
Soft Money Origins
Modern campaign finance law in the U.S. truly began with the enactment of the Federal Election Campaign Act of 1971 (FECA). While it has been amended numerous times over the past fifty years, the legislation remains the main U.S. federal law regulating campaign fundraising and spending. In short, the goal of FECA was to increase transparency in the political process.
But in 1979, the FEC made an amendment to FECA allowing political parties to raise funds for “party-building” efforts. That vague term used in the introduction actually came from this amendment. The FEC reasoned that this amendment would create a bit more distinction between political parties and their candidates.
This ruling marked the beginning of soft money.
The Soft-Money Mound Becomes a Mountain
Soft money spending during election years (1992-2002)
Unfortunately, we could not find figures for soft-money contributions between the years 1980 and 1990 but you do see a significant upward trend at the turn of the millennium. Donations from individuals and organizations both grew significantly, spending a collective $88 million in 1992 to $457 million a decade later.
You will notice that soft money contributions experienced a massive spike during 1996. That was a presidential election year, so one would expect there to be more donations. But then again, the 1992 election cycle did not generate so much soft money contributions.
So what’s behind the spike? Issue advocacy advertising.
Issue advocacy advertising, as the name suggests, is communication that promotes a set of ideas or policies. The Supreme Court had already sowed the seed for issue advocacy advertising to grow into candidate advertising in their 1976 ruling for Buckley v. Valeo. The Court stated, “the distinction between discussion of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical application.”
The Advertising Battleground
According to The American Prospect (a liberal magazine), advertising became a major battleground between candidates, parties, and the advocacy groups backing them: “…in the 1990s, issue advocates began spending to elect or defeat congressmen and in 1995-96 the AFL-CIO launched a $35 million advertising campaign targeting key congressional races. A similar game was played by both political parties, a coalition of business groups, environmental organizations, and others.”
The University of Pennsylvania’s Annenberg Public Policy Center tracked all the advertising spending during the 1995-1996 election cycle. Their findings provide further support for this surge in advertising, which could only really be funded by the unregulated and theoretically limitless soft money. “more than two dozen organizations engaged in issue advocacy advertising during the 1995-96 election cycle, at an estimated total expense of $135 million to $150 million…and [c]andidates for president, the U.S. Senate, and the U.S. House spent a combined total of just over $1 billion on their campaigns in 1995-96. Of that, an estimated $400 million went into advertising.”
40% of all campaign spending went to advertising. It appears that much of the soft money just went to the very thing that 40% of campaign contributions were going to anyway. Both political parties and their candidates reportedly fundraised for these ‘independent’ advertising groups. Some nonprofit organizations were allegedly created to fund political advertising without actually doing much else. This way they were able to make ‘dark money’ donations, where the donors can remain completely anonymous if they wished.
The Bipartisan Campaign Reform Act of 2002
But the soft money boom was just one of the many events that would erode the public’s confidence in businesses and the government.
On the business side, the bursting of the dotcom bubble, along with the subsequent Worldcom scandal and Enron scandal, showed the regulatory growing pains the U.S. would have to undergo dealing with the fast-growing internet and technology industries. Investors lost an estimated $5 trillion.
On the governmental side, scandals from the 1996 elections and the impeachment of President Bill Clinton had left a sour taste in the mouths of the public. To name a few, news outlets covered questionable presidential pardons issued to the politically connected, controversial Buddhist temple fundraisers, and the use of the Lincoln Bedroom as a room for special guests.
Public confidence reached a low point, and many believed that money had created deep corruption in politics. The government decided to start cleaning up its own house. One area they tackled was the sudden explosion in soft money and issue advocacy advertising.
Soft Money Reforms
Senators John McCain (R-AZ) and Russ Feingold (D-WI) introduced the Bipartisan Campaign Reform Act (BCRA) of 2002, legislation that would officially ban national policy party committees from raising soft money. As an aside, the BCRA would also prohibit corporations from creating issue advocacy advertisements and establish periods where they could not be broadcasted.
The House approved the BCRA first with a 240–189 vote. The bill then passed the Senate in a 60–40 vote. President George W. Bush refused to weigh in on the issue but eventually signed the law in March 2002.
Since the enactment of the BCRA, a number of Supreme Court decisions have essentially eliminated some key provisions in the bill. The Court’s (in)famous 2010 Citizens United v FEC ruling struck down the restrictions on issue advocacy advertising, on the basis that they violated First Amendment free speech laws.
The ban on soft money, however, remains, but that doesn’t mean various groups haven’t found ways around it.
From Soft Money to Dark Money
While soft money has been controlled, unlimited campaign financing does not truly appear to have been eliminated. We mentioned it before, but opportunities to contribute dark money remain ample.
Through super PACs (political action committees without the contribution restrictions) via shell companies or donations to certain tax-exempt organizations, corporations and wealthy individuals can anonymously pump as much money as they wish into the political system.
You don’t have any way of finding out who these financiers are or where they come from.
Money obviously isn’t the only factor in whether a candidate wins an election, but it definitely helps. Rallies, advertisements, travel, lodging, mountains of money go into funding and garnering support for election campaigns.
So what do you think? While soft money does not circulate in the U.S. political system anymore, big money, and possibly foreign money, still appears to be an influence in elections. Does it give undue power to the potential plutocrats looking to undermine our democracy for their own gain?
The Zero Theft Movement, along with our growing community, work together to calculate the best estimate for the monetary costs of corruption in the U.S. Corporate, political, and everything in between.
We have built a safe and independent platform where you and your fellow citizens work together to investigate and debate potentially rigged areas across the economy. You vote on whether (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically.
The ZTM community knows that many businesses, including some corporations, act ethically. We are trying to hold the bad actors accountable. The corrupt corporations, lobbyists, and government officials. That way, good people and businesses can properly thrive and enjoy the piece of the pie we’re all due.
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.