University of Missouri - Columbia.
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Posted 11.17.05

Political Costs Outweigh Benefits of 'Soft Money' Contributions, Researcher Says

COLUMBIA, MO -- When President Bush signed the McCain-Feingold Bill into law in 2002, it represented bipartisan cooperation to end the flow of unrestricted soft money contributions. Soft money refers to a contribution that is not made directly to a candidate's campaign. Soft money is often spent on advertisements, which are often attacks on the opponent's positions and thus benefit the candidate. A University of Missouri-Columbia researcher wanted to know why political parties are willing to legislate against soft money, despite the benefits of accepting such donations.

"The ability to bypass hard money limits with unlimited soft money alters the contributory incentives," said Christine Lipsmeyer, assistant professor of political science at MU, who conducted the study along with David Gill, Junior Research Fellow in Economics at Trinity College, University of Oxford. "Instead of looking to multiple individuals and groups to give maximum regulated amounts, parties appeal to donors to give them vast amounts under the soft money umbrella."

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By voting to restrict soft money, each party can cut off those funds to the opposing party. In the past few electoral cycles, the gap between Democrat and Republican donations has narrowed. In the 1990s, Republicans held a 3-to 18-percent lead over Democrats in the amount of donations they received, but in 2000, the contribution amounts differed by less than 1 percent. Lipsmeyer believes the bipartisan cooperation that helped pass the McCain-Feingold Bill was a result of a shared desire to equalize the other party's funding.

In addition, politicians were eager to pass soft money reforms in order regain the trust of voters, who were becoming increasingly suspicious of the role soft money played in the electoral process. Coupled with more media attention to the large sums of money, politicians were trying to find ways to preserve their credibility, and voting against soft money was one way to do that, Lipsmeyer said.

Since soft money usually buys access to politicians, voting against those contributions helps politicians avoid the appearance of impropriety in the electoral process. Essentially, the benefits of accepting soft money contributions are not enough to offset the costs of voters not trusting their elected officials as a result.

Despite the passage of the McCain-Feingold Bill, which eliminates unregulated soft money contributions, Lipsmeyer does not think the debate over soft money is over.

"No legislation can be watertight, and contributors will endeavor to get around the restrictions wherever possible," Lipsmeyer said. "Where donors succeed in doing this, the parties will once again find themselves forced to compete for funds and provide the expected levels of access."

The study recently was published in the journal Public Choice.



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