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Campaign Finance: Constitutional and Legal Issues of Soft Money (CRS Report for Congress)

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Release Date Revised Aug. 8, 2005
Report Number IB98025
Authors L. Paige Whitaker, American Law Division
Source Agency Congressional Research Service
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Summary:

Prior to enactment of the Bipartisan Campaign Reform Act of 2002 (BCRA), P.L. [Public Law] 107-155, the term 'soft money' generally referred to unregulated funds, perceived as resulting from loopholes in the Federal Election Campaign Act (FECA), 2 U.S.C. §§ 431 'et seq'. Generally, the intent of BCRA, (effective Nov. 6, 2002), which amends FECA, is to restrict the raising and spending of soft money. This Issue Brief discusses constitutional and legal issues surrounding two major types of soft money that BCRA regulates: political party soft money and soft money used for issue advocacy communications. Corporate and labor union soft money, which FECA exempts from regulation and is not addressed by BCRA, is also discussed. Prior to BCRA, political party soft money was funds raised by the national parties from sources and in amounts that FECA otherwise prohibited. Such funds were used in part for overhead expenses and issue ads, and then largely transferred to state and local parties, in accordance with the applicable state law, for grassroots and party building activity. As a result of BCRA, FECA now generally prohibits national parties from raising or spending soft money, 'i.e.' funds raised outside the restrictions of FECA. In 'McConnell v. FEC', (No. 02-1672), the U.S. Supreme Court will be considering the constitutionality of the BCRA restrictions on party soft money.
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