Hard Facts about Soft Money
by Rachel Leon Common Cause/NY recently released a new report on the issue of soft money. Soft money is a loophole that makes the rest of our campaign finance law functionally meaningless. While our state sets limits on what political parties can raise and spend – a political party may accept no more than $84,400 from an individual in a year, for example – the parties are able to subvert all of these rules simply by labeling the funds they raise “soft money.”

The political parties, as you might imagine, make good use of the loophole available to them. Soft money is booming in our state, with $53.2 million contributed to party housekeeping accounts since 1999.

The practice cuts across party and ideological lines. Soft money is raised and spent by the Democrats, Republicans, Conservatives, the Liberal Party, the Working Families Party and the Independence Party, among others, though the biggest parties tend to raise and spend the most.

While raising soft money is an equal opportunity activity for the parties, it is clear that soft money donors are a more elite and less inclusive set. Our research proves beyond a shadow of a doubt that soft money is by and large given by an elite group of businesses and individuals whose capacity to contribute far exceeds that of ordinary New Yorkers.

Soft money donations are given in sizes that dwarf what would be legal if the funds were given to candidates, despite the fact that New York State has remarkably high limits on contributions. The single largest soft money contribution made since 1999 was a check for $705,750 given by Mayor Michael Bloomberg to the New York State Republican Committee. About 30% of all soft money comes in at amounts greater than $50,000 (or greater than the average New Yorker’s annual salary according to the Bureau of Labor statistics).

By far the largest category of soft money donors is businesses, which have given $32,176,987 since 1999 or 60.5% of all soft money contributions. Individuals comprise the next largest category of donors having given 19.6% of the total. And unions come in a distant fourth, having given 9.1% of the total.

The myth of soft money is that it is contributed and spent for what is euphemistically called “party building” purposes that are unrelated to promoting particular candidates. But this premise is little more than a widely acknowledged legal fiction that should not be taken seriously. Soft money corrupts for a simple and obvious reason. Soft money donations are given in such huge amounts - $50,000, $100,000 or more – that the donors typically expect to receive something in return for their investment.

In New York, it seems that some big soft money donors have been big recipients of government largesse. One example of give to get is Kawasaki Rail Car, Inc. is a Japanese company that has enjoyed big MTA contracts for the past two decades and especially under the Pataki administration. In 2003 the company, with a partner, won a $2.3 billion contract with the MTA to build new subway cars. They have given hundreds of thousands of dollars to Republican Committees controlled by Pataki.

The term “soft money” might sound harmless, but it represents a gaping loophole in our campaign finance law that must be closed.

The same considerations that led the Congress to remove the taint of soft money from federal elections should lead our state legislature to ban soft money in New York.

Rachel Leon is the Executive Director of Common Cause New York.