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Political Financing's New State

Elections: Alabama's loose campaign funding laws show how parties might bypass strict federal 'soft-money' curbs after Nov. 5.


MONTGOMERY, Ala. — Johnny Crawford is a state lobbyist whose self-effacing charm belies the millions of dollars in campaign contributions he has at his disposal.

"I'm just little old Johnny down here," the stocky political operative says from behind a puff of cigarette smoke in his well-appointed office in the state capital.

Using a single post office box for no fewer than 10 political action committees, he has amassed a war chest of nearly $2 million in just 18 months from some of the country's biggest corporations and richest businesspeople.

And he has doled it out by the hundreds of thousands to everyone from the mayor to Alabama's governor to the Democratic National Committee in Washington--which on one recent day received $300,000 from an array of Crawford's committees.

Crawford may well be one future face of how America pays for its politics post-Nov. 5, a major money broker who personifies loopholes in the landmark campaign-finance reform law that kicks in at the federal level after midterm elections.

The law severely curtails how money can be raised and spent by national parties. But most of those rules don't affect how contributions are amassed and distributed by state PACs: Those are governed by 50 different sets of regulations, and Alabama's are among the loosest in the nation.

Crawford's are among more than 400 PACs registered in the state. And since the current election cycle began in January 2001, they have collected more than $31 million in corporate, union and individual contributions--known as "soft money"--often moving the money through a series of PACs, which erases public traces of their original donors.

It's a political treasure trove that analysts say almost certainly will grow exponentially after Nov. 5.

The Bipartisan Campaign Finance Reform Act, signed into law this year, bans the use of soft money at the federal level.

Soft-money contributions are unregulated, unlimited donations that companies, unions and others pour into the national political party committees for advertisements, voter registration and other activities intended to influence elections. Because the money is not spent directly on a specific candidate, it has not been subject to federal contribution limits.

The national parties have collected and distributed hundreds of millions of dollars worth of it in the last decade but can't touch it as of Nov. 6, the day after the midterm congressional elections.

The special interests that have been sending that cash to Washington will be looking for new ways to use it to back candidates and to finance the issue ads and direct mail campaigns now funded by federal soft money, according to political analysts and reform activists.

Many predict that money will gather at the state level in loosely regulated PACs and from there find its way into the coffers of state party committees and their candidates, where it can have much the same effect.

"These PAC managers become instant money brokers," said Ed Bender of the Montana-based National Institute on Money in State Politics. "People and corporations will go to them from all over the country with bundles of checks to spread around at political fund-raisers and to party committees, not only in their own state but in other states."

Thousands of state PACs already are raising hundreds of millions worth of campaign contributions. Reform advocates say soft money is legal in all but one state: Connecticut. Many state legislatures have tried to limit the amount of such contributions, but restrictions often are riddled with loopholes that keep the special interest money flowing far beyond intended maximums, Bender said.

Campaign finance law in California, for example, prohibits the more than 2,000 state PACs from receiving or distributing individual contributions of more than $5,000. But a loophole lets far greater sums flow through PACs that support or attack ballot initiatives, rather than specific candidates.

The bottom line, according to Bender and other reformers: The hard-fought federal campaign finance reform law may well end up being a giant step backward. It will, they fear, merely shift many of the soft dollars from the national level, where they have been subject to strict accounting and rigorous monitoring, to states such as Alabama, where the money trails are obscure at best.

With just 2.4 million registered voters, Alabama has 486 registered PACs, which can be created overnight and take in and distribute unlimited amounts of soft money. The proliferation of PACs stems in large part from the way the state set up limits on contributions.

Corporations can give a maximum of $500 per election, per PAC, per year. With as many as 17 state and local elections in a given year, the true ceiling is as much as $8,500 per PAC per year. The PAC then may spend the money on any candidates, races or issues--or donate it to another PAC.

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