Washington, DC - If individual hard money contribution limits were increased from $1,000 to $3,000, then new hard money contributions could easily surpass the amount of party soft money banned by the McCain-Feingold campaign finance reform bill that the Senate began debating this week, according to a new report from Public Campaign, “Hard Facts on Hard Money.”

The 14-page report examines the role of “hard money” in political fundraising. Although much attention is focused on party soft money, hard money remains the major feature of the campaign finance landscape, comprising about three-fourths of the money collected by candidates and political parties, and coming from the same special interest donors that soft money does.

During the two-week Senate debate on the McCain-Feingold bill, the Bipartisan Campaign Reform Act of 2001, as many as 30 amendments are expected, including several to raise hard money limits from $1,000 to $3,000, or as much as $6,000. Raising hard money limits is also central to legislation that Sen. Chuck Hagel (R-NE) is expected to offer as a substitute to the McCain-Feingold proposal.

“Lots of donors give both hard and soft money,” said Public Campaign executive director Nick Nyhart, “and they give it for the same reason: they want access to lawmakers and influence over policy. Banning one kind of special interest contribution while increasing another makes no sense.”

“With incumbents raising so much more in large contributions than their challengers, it’s understandable that some Senators would want to boost the limit,” said Nyhart. “But reform should level the playing field and promote more competition, not give entrenched Members of Congress their seats in perpetuity.”

Referring to an amendment passed on Tuesday that increases the limit for candidates opposed by wealthy self-financed opponents, Nyhart said “Yesterday Senators were concerned about being taken on by wealthy opponents who could outspend them. Adding a general limit increase would solidify their position against all comers, not just the wealthy. Before long this bill will be better called ‘The Incumbent Protection Act of 2001’ than ‘The McCain-Feingold Bill’.”

Among the report’s findings:

• Well connected donors bundle hundreds of $1,000 hard money donations. Their influence reflects their ability to raise hundreds of thousands of dollars from family members, business colleagues and others-not their personal $1,000 contributions. Increasing the limit would increase their influence.
• In the 2000 elections, seven out of ten dollars collected by federal candidates from individual donors came from donors of $200 or more. Forty-four percent came from donors giving $1,000 or more.
• In the 2000 elections just 1/8th of one percent of the voting age population gave $1,000 or more. Top donors have influence disproportionate to their numbers even at the current limit.
• These donors are not representative of the nation economically or demographically. They are wealthier and older than most Americans and most are white males.
• Senate incumbents in 2000 raised, on average, nearly three times as much as their challengers did from donors of $1,000 or more: $1.8 million v. $650,000. House incumbents in 2000 raised more than twice as much from donors of $1,000 or more as their challengers, on average: $178,000 v. $85,000. Raising the hard money contribution limit would exacerbate the advantage incumbents already enjoy over challengers.
• The total amount of hard money contributions collected by candidates and parties rose by $555 million in 2000 as compared to 1996. Soft money increased by $232 million during the same period.
• The effect of bundled hard money contributions on policy is can be clearly seen in recent Congressional actions on bankruptcy reform, the Arctic National Wildlife Refuge, and workplace ergonomics regulations.

The term “hard money” refers to campaign contributions regulated by the Federal Election Campaign Act (FECA), which sets limits on contributions by individuals, political parties, and PACs, among other conditions. Party “soft money” describes unlimited contributions to national party committees.

Effective reform must address both hard and soft money contributions. Public Campaign supports a comprehensive Clean Money system that addresses both hard and soft money contributions, by providing public funds and eliminating the need for candidates to depend on special interest contributions, hard or soft. Arizona, Maine, Massachusetts, and Vermont have new Clean Money systems. On the federal level, Senator Paul Wellstone (D-MN) and Representative John Tierney (D-MA) have proposed legislation. The report provides analysis of national hard money and party soft money fundraising for the 2000 election cycle, including contributions from January 1, 1999 through December 31, 2000, downloaded from the Federal Election Commission by the Center for Responsive Politics.

Click here to read the report