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Parties Poised to Exploit Broad New Rules | Rules of the Game

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When Congress moved quietly late last year to permit much larger contributions to the political parties, some experts cast the rules change as, at best, an improvement on the old system, and, at worst, inconsequential.  

“This isn’t going to be a game changer for big money in politics,” Jonathan Bernstein, political scientist and columnist, said of the higher limits . The limits now allow an individual to give as much as $1.7 million to the parties in one election cycle — an exponential increase over the previous per-cycle cap of $64,800.  

“For those who want more transparency, this means more accountability in political fundraising,” Republican National Committee Chairman Reince Priebus declared in USA Today. The rule’s cheerleaders enthuse that strengthening parties tempers partisanship and frees parties to better compete with unrestricted and increasingly influential outside groups that often operate outside the disclosure rules.  

It remains to be seen whether such sunny predictions come true, or whether the watchdogs' dire warnings — that the new rules will usher in a new era of soft-money abuses — will prove closer to the mark. Either way, there’s little question that party officials will test the new regulations to the fullest, exploring every possible legal avenue to fatten their coffers.  

True, the new limits do not free the parties to raise unrestricted money for just any purpose. Under the campaign finance provisions inserted into the eleventh-hour “cromnibus” spending package, the party committees may raise larger amounts only for separate accounts to pay for their conventions; for buildings and facilities, and for election recounts and other legal matters.  

But the broad wording of the campaign finance changes, and the backdoor way in which Senate leaders slipped them into budget legislation, leave plenty of room for interpretation. In the 1990s, a single Federal Election Commission regulation that approved soft money for “party building” ultimately led the parties to round up unlimited corporate checks to pay for campaign ads cast as “issue ads.”  

This time, look for the parties to use funds set aside for building, legal and convention costs in equally creative ways. Of particular interest will be funds ostensibly raised for “the construction, purchase, renovation, operation and furnishings of one or more headquarters buildings of the party,” as the statute describes it. The term “party operations,” for one, could be interpreted to include “activities such as data mining and modeling projects or opposition research centers,” noted election lawyers at Covington & Burling in a recent client memo .  

The new party convention accounts could also become “a route to tickets and passes to the national conventions,” the memo adds. The reference to “headquarters buildings of the party” is also open to interpretation. It could mean one national party headquarters building in Washington, D.C., for example, or buildings in states all over the country, noted Robert Lenhard, a Covington & Burling partner who coauthored the memo with four colleagues.  

Having been approved with no public notice or comment, the new rules raise some tough questions said Lenhard, a former chairman of the FEC: “This is a statute that was passed without any committee hearings, without any statutory definitions, without any legislative history whatsoever.”  

Legal funds, for example, could potentially be spent in any number of ways — and as yet, campaign finance lawyers don’t have ready answers. The new rules specify that parties may raise additional funds in accounts “to defray expenses incurred with respect to the preparation for and the conduct of election recounts and contests and other legal proceedings.”  

But what is meant by legal proceedings? Could it, for example, be interpreted to include the Republican Party’s legal challenge to the Obama administration’s alleged abuses of executive power? Or to help pay for additional legal challenges to the Affordable Care Act?  

“I don’t know,” said Trevor Potter, another former chairman of the FEC and president of the Campaign Legal Center. “None of us know.” He added, “I haven’t seen any legislative history. I’ve just seen these provisions. They’re pretty broadly drafted.”  

It falls naturally to the FEC to step in and help answer the many regulatory questions raised by the new party fundraising rules. But the commission, divided evenly between Republicans and Democrats, has stalemated repeatedly on key policy matters in recent years. And few expect the FEC, which helped usher in the first round of soft money, to offer party officials much guidance.  

In the meantime, even experts who applaud the infusion of fresh funds into the political parties have little doubt the parties will leverage them to the fullest. Lenhard noted, “I think politics is very entrepreneurial. And history has shown us that people are very creative and thoughtful in looking for ways they can succeed in a competitive environment.”  

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