New Campaign Laws Don't Stop Advertising

Like businesses and unions, the wealthy can no longer make big donations to the national parties. But well-heeled givers do have a special chance to influence elections through last-minute ads.

An exemption in the new campaign finance law (search) lets individual donors give unlimited amounts to certain tax-exempt, unincorporated groups to pay for TV and radio ads targeting candidates just before elections.

Large Democratic donors have already donated or pledged $10 million to a new group called the Media Fund (search) formed by former Clinton White House official Harold Ickes to air ads next year against President Bush.

"I think we fully understand the law and we're not going to break it," Ickes said in a telephone interview from California, where he met with prospective Hollywood donors last week.

Ickes declined to identify contributors, saying the group will file its first report next month. But several longtime Democratic Party donors say they'll help Ickes' organization, or groups like it.

Silicon Valley executive Steve Kirsch said he will donate to Ickes' group, possibly to the tune of six or seven figures. Harvey Weinstein, co-chairman of the Miramax movie studio, is studying groups such as Ickes' and probably will support them, spokesman Matthew Hiltzik said.

Multibillionaire businessman George Soros (search), who has already pledged at least $10 million to a Democratic-leaning get-out-the-vote group, may also donate to the Media Fund, Ickes said.

Not to be outdone, Republicans have already mustered an answer to Ickes' effort. Americans for a Better Country (search), a group whose founders include former Bush Florida recount lawyer George Terwilliger, has asked the Federal Election Commission for guidance on the legality of collecting and spending soft money, including on election ads.

The option is so attractive that some traditional political groups, such as the GOP-leaning Club for Growth (search), are considering shedding their incorporated status to qualify for the right to influence elections with big-dollar ads down the stretch.

"I'm sure if and when that ever happens it will drive all the campaign finance reformers batty. But it clearly is allowed by the law," said David Keating, executive director of the Club for Growth.

Keating's group already collects several five- and six-figure donations from business executives, including at least $75,000 in recent months from Arkansas banking magnate Jackson Stephens.

It is waiting to see how the Supreme Court rules on challenges to the law before it decides whether to try the strategy. A court ruling could come this month.

The law, which took effect in November 2002, bans national party committees from raising soft money - unlimited contributions from corporations, unions and wealthy people - and imposes new limits on political ads.

Interest groups cannot air TV and radio ads the month before a primary and two months before a general election if they identify a federal candidate, are funded with corporate or union money or target the candidate's district.

The exception is any large donation given by an individual to spend on ads by tax-exempt groups that are not legally incorporated and which keep any large individual donations they receive for ads separate from corporate and union donations.

The first big tests for that exemption are approaching.

The ad restrictions will come into play in the presidential race starting Dec. 14, 30 days before the District of Columbia's nonbinding primary. They next kick in Dec. 20 in Iowa, which holds its caucuses Jan. 19, and Dec. 28 in New Hampshire, where the primary is Jan. 27.

Campaign finance watchdog Fred Wertheimer, who helped congressional sponsors write the law, said they had no choice but to allow the use of unlimited individual donations for political ads. He cited the landmark 1976 Supreme Court decision Buckley v. Valeo (search), which found that individuals' political expenditures were a form of free speech.

He vowed, however, to watch closely groups that try to spend such money on ads. "I'm not giving a Good Housekeeping seal of approval," Wertheimer said. "I'm watching what these guys are doing."

Individual donors have always been permitted to run their own ads with their own money, but Democratic donor Kirsch said his ad dollars will have more impact if a political group spends them.

"They're a lot more organized in terms of understanding what media should be run where," he said.