Parties stretch dollars by funneling money through states

WASHINGTON (AP) -- Seizing another loophole, Democrats and Republicans are funneling money through state parties to buy their television ads in a tactic that preserves the limited dollars they can spend directly on candidates in the fall.

If the national parties had bought the ads themselves, they would have been required by federal regulations to use mostly "hard money" -- the limited contributions that can be spent directly in support of candidates.

But by routing dollars first to state affiliates, the parties can use a greater portion of "soft money," the unlimited donations from unions, corporations and wealthy individuals that are easier to raise and cannot be directly used to help elect candidates.

So while the ads star Al Gore and George W. Bush, are produced by creative minds in Washington and paid for with money raised by the national parties, as far as election law is concerned, it's the state parties who are behind them.

"We don't think this is in any way undermining the letter or the spirit of the law," said Joseph Sandler, general counsel for the Democratic National Committee, which pioneered this technique in 1996. "This is like the tax code. You don't pay more taxes than you owe."

Republicans say the same. "There are laws and there are rules and we're very careful to comply with them fully and completely," said Cliff May, spokesman for the Republican National Committee.

The Federal Election Commission has said it's all perfectly legal, and that disturbs those who advocate changes in campaign finance law.

"There are really no rules," said Larry Makinson, executive director of the Center for Responsive Politics, which monitors political fund raising. "You can spend just about anything just about anywhere as long as you dot your i's and cross your t's. And both parties are doing plenty of it."

And even some of those involved agree that the system is bizarre.

"This is the end result of an antiquated and archaic federal election law that needs to be seriously revamped," said David Leland, chairman of the Ohio Democratic Party. "But these are the rules that everyone is playing with, and so be it."

These rules mean that a dollar spent for an ad in Oregon travels across the country at least three times before it arrives at the TV station.

The money is raised by the Democratic and Republican national committees in Washington, and when they are ready to run an ad, they electronically transfer it to the state political parties.

The states then transfer the money back to Washington, into the accounts of ad buyers.

Finally, the buyers send it back to the targeted states yet again, to TV stations to pay for the ads.

And while a state party can veto an ad coming into its state, strategists in Washington will determine what the ads look like, what issues they tackle and where they will run.

So far this summer, the DNC has spent nearly $20 million on TV ads in 17 states promoting Gore. The RNC has spent more than $17 million on ads touting Texas Gov. Bush.

Virtually all of it has been channeled through the state parties.

Federal law requires that, in an election year, if the national party does the buying, 65 percent of the money must be limited and more scarce hard dollars.

But the rules are different for state parties, where a formula determines the ratio of hard-to-soft money. The formula accounts for the number of federal vs. state and local candidates on the ballot, and in many cases, the percentages are virtually flipped, with only a third of the dollars having to come from hard money accounts.

This leaves the parties with more hard money, which can then be channeled into congressional races across the country this fall.

The parties point to another advantage to channeling the money to state parties. The ads say that they are paid for by the "Ohio Democratic Party" or the "Oklahoma Republican Party."

"We think the message is more powerful when we have a local messenger," said the RNC's May. "And that is the state party."

On the Net:

Democratic National Committee:http://www.democrats.org/

Republican National Committee: http://www.rnc.org/