Soft Money Rudy

Giuliani busts city and federal campaign limits on his way to possible senate run

The three Giuliani campaign committees combined spent $655,443 of the $1.2 million they raised since they were formed last March, mostly on staff, consultants, and Giuliani's national meanderings. If the mayor runs for U.S. Senate, however, he can only use the $248,597 remaining in his $1000-a-donation federal candidate committee, Friends of Giuliani. Any direct use for a senate race of the $102,424 in his state committee (Giuliani for New York), or the $256,369 in his $5000-a-contribution federal PAC (Solutions America), would violate the law.

Under an intricate federal formula, Giuliani may be able to shift as much as $2000 from donors who've only given to the state committee or the PAC into his federal candidate committee— $1000 for the primary period and another $1000 for the general election. He may also continue to fundraise through the state committee, eventually transferring the balance to the state Republican, Liberal, or Conservative party. He can also make transfers of up to $5000 apiece from the federal PAC to any party committee.

If Rudy becomes the senate nominee of any or all of these parties, he can then use whatever funds he legally transferred to the party committees to buy commercials, much like Bill Clinton and Bob Dole did through the DNC and RNC in 1996. Of course, the party committees can raise their own money for the same purposes. The only apparent restriction— based on the recent Federal Election Commission (FEC) sanctioning of the Clinton/Dole activities — is that the commercials must fall short of explicitly urging a vote for Giuliani, though they can contain every other element of an election ad. While FEC auditors and attorneys found the Clinton/Dole ads violated federal law, the agency's politically appointed commissioners rejected their own staff findings, legitimizing this extraordinary soft money end run around federal campaign limits.

Indeed the three Giuliani committees have already raised $480,748 in contributions from 107 individuals, unions, and partnerships that exceed the $2000 maximum for a candidate's committee. Should Giuliani continue to seek donations through the state committee and federal PAC, this total may turn out to be only the tip of a soft money iceberg. A candidate of fat cat donors who set records in 1997 for corralling more donations than ever from those who gave the maximum (and more) allowable under city laws, Giuliani now shows every sign of financing a senate race primarily through big-money gifts laundered through these soft money conduits.

The irony is that the very charter provision he is using to try to kill the 4-to-1 match— the corporate contribution ban authored by a mayoral commission chaired by his own alter ego, Peter Powers— contained language urging the CFB to act to regulate soft money evasions of its own system. Giuliani's commission concluded just last August that "soft money undermines the effectiveness" of the CFB, citing as a typical example "contributions to political parties," and "questioned whether the Board has taken every action legally and constitutionally possible to regulate soft money."

In addition, The New York Times, which assailed the FEC reversal of its staff, wrote 109 editorials denouncing soft money and seeking federal campaign finance reform in the last two years. Giuliani may be counting on Chuck Schumer's exploitation of the Liberal Party for $1.7 million in soft money expenditures last year to justify his own future fondness for this gaping loophole, using Schumer to silence the Times and other finance reformers.

But Schumer raised $16 million under the $1000-a-donation strictures of the federal system, resorting to the Liberal stratagem only at the end and for what may turn out to be a paltry sum compared with Rudy. Giuliani seems primed to pivot the financing of a senate campaign around contributions that sidestep federal limits even while they demolish the city restrictions he played such a key role in devising.

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