Fred Thompson

Mr. THOMPSON

Mr. THOMPSON. We have had extensive conversations on this over the past, I guess, year and a half. My desire would be that--this has been off the table now for some time. Until yesterday, I did not know it was going to be brought back up. But now that it has been brought back up, it is back on the table, as we all knew it would be and should be, that we would sit down again on some proposed amendments to see if we could agree on some. We might be able to. As I say, I think they have improved the bill. It is all in the eye of the beholder. The thinking was it was a bill right where it ought to be. The administration came along and made 20-some-odd suggestions. I understand they were adopted. Presumably, it is a better bill. Maybe it can be even a better bill. Up until yesterday, the negotiations did not go the way I would have liked for them to go, frankly, but I cannot complain about not having been included in discussions. We have had a lot of discussions. What I would like to do is address the question of the Senator, though, a little bit more directly, the other question he asked. The question is: Why? I think the answer would be that for some of these items, there is foreign availability. If they are out there and France or someone, or Russia, let's say, is supplying China with these items, why shouldn't we? It raises a question--I did not plan on getting into the substance of the debate as much today as we will later on--as to whether or not there is a moral dimension to our foreign policy, whether or not there is a moral dimension to our export policy, whether or not, because some other entity is supplying somebody with something they should not have that hurts our national security potentially--and these items I am talking about, some of them, are serious threats to our national security, as acknowledged in the bill, if it is mass marketed--whether or not, even if they would get them, we ought to be supplying them. I would not feel any better to find American troops shot down with technology supplied by American companies if I knew there was mass marketing of those products. In the last year, the PRC reportedly was illegally using American supercomputers to improve their nuclear programs. Just 2 months ago, we learned that Chinese technicians were installing fiberoptic cable for Iraqi air defenses, a clear violation of U.N. sanctions. Worse yet, this assistance and technology which were provided to Chinese companies by American firms when President Clinton decontrolled this equipment over the objections of NSA in 1994 aided Saddam Hussein in his quest to shoot down American and allied pilots. I don't know if it proved whether or not this very strand of fiberoptic was used down there or not. But what apparently is pretty clear is that we took this Chinese company from a startup and, because of business that we did with it, put it in a position where they could go down to Iraq and help Saddam Hussein better shoot down our pilots. That merits serious consideration. It does not merit a day or a day and a half of discussion in some kind of desire to balance what we are talking about with our commercial interests.

Mr. THOMPSON. There is no question that we are loosening. There is no question that it will inure to the benefit of the Chinese, who are well known to be concentrating especially on high-technology matters, building up their military, building up their missile capability--both ICBMs and shorter range missiles. I think the best witness on this, Representative Cox, has been quoted a few times. The Cox Commission stated in July 1999: The People's Republic of China was diverting U.S. manufactured high-performance computers for unlawful military operations. Specifically, it was using American-made computers to design, model, test, and maintain advanced nuclear weapons. The commission clearly stated that the illegal diversion of high-performance computers for the benefit of the People's Republic of China military is facilitated by the lack of effective post-sale verifications of the locations and purposes for which the computers are being used. High-performance computer diversion for PRC military use is also facilitated by the steady relaxation of U.S. export controls over the sale of high-performance computers. The committee added that U.S. origin high- performance computers have been obtained by PRC organizations involved in the research and development of missiles, satellites, spacecraft, submarines and military aircraft, just to name a few.

Mr. THOMPSON. I am not saying I necessarily object to any portion of this. I am saying there is an inconsistency here.

Mr. THOMPSON. I have not thought it through. I think after it was decontrolled in 1994, over the objections of the National Security Agency, the cat was out of the bag. I am not sure it would have made any difference. I think the point is that what we are dealing with today would further decontrol a host of additional items that heretofore you had to have a license to get. Some of those--I would venture to say the large majority of those things--would be harmless. But my concern is whether or not we have a procedure to catch the ones that are not harmless. That is what we are trying to deal with here. I hope we can move in that direction.

Mr. THOMPSON. Well, I understand it might be desirable for the President to do that. For my part, I would rather leave it up to the President to decide when he wants to negotiate with foreign leaders on these matters. I will also suggest that when the President makes the determination under this enhanced control provision, that you just pointed out, that an item on one of these lists would constitute a significant threat to the national security, he ought to be given quite a bit of leeway. It might be a good idea to negotiate with foreign leaders; it might be a good idea to do a lot of things. We have to ask ourselves how many hoops we want the President to jump through if, in fact, he makes a determination that it constitutes a significant threat to national security. I am not trying to negotiate the details of the bill with my friend today. This is one of the benefits of discussing this today and one of the reasons we are not ready to put a bill to bed. I don't claim to have all the answers to it. I haven't had a chance to think all the details through. But I believe we really need to ask ourselves how many hoops we want the President to have to jump through before he can exercise some authority when he makes a determination that there is a significant threat to the national security. All these requirements I read a while ago having to do with the President negotiating, with reporting to Congress, having the thing expire--it even expires under that set of provisions--that is greatly different from the enhanced control provision that doesn't put any of those requirements on him if he determines that there is a significant threat to national security. We don't want a court 2 years from now having to be the one to decide what we meant when we drafted this legislation. We need to decide here in this Chamber, after thorough debate and consideration, just exactly how that ought to be worded and whether or not we want to have what appears to me to be inconsistent provisions in the legislation. I thank my friend for his comments. It is the basis for some discussion, as far as I am concerned, in an attempt to reach some resolution. I was not aware we were going to debate all the details. I welcomed the opportunity to have done that. The issue before us today is whether or not this is the right time, in the midst of everything that is going on in the country right now and everything that is happening internationally, to choose to signal to the world that we want to liberalize our export policies with regard to dual-use, high- tech, military-related items when we know the primary beneficiary of it is going to be China. It is not a good time, and that is the reason I join my colleagues in opposing the motion to proceed. I do look forward, when we have had a chance to draft our amendments and hopefully have had a chance to look at the administration's Executive order that is supposed to fill in some of the areas that are a little bit sparse, to coming up with an Export Administration Act that is reauthorized but one that does what the Export Administration Act was designed to do--not to balance commerce with national security but to protect national security and do those things that are reasonable. Nobody is intent on trying to protect things that are unprotectable. Nobody is intent on basing the legislation on yesterday's technology. Everybody knows that the world has changed. But that does not mean we should, without very careful consideration, change a policy we have had in this country for decades in terms of controlling those kinds of items and go to something that might sound reasonable and logical: The genie is out of the bottle; they can get it anywhere else; our friends will sell it to them; we might as well sell it to them. I am not there yet. I yield the floor.

Mr. THOMPSON. No, there is no doubt in my mind, Senator.

Mr. THOMPSON. Will the Senator yield for a brief question?

Mr. THOMPSON. With all due respect, I suggest there is more to it than that. It is not a matter of shortening it or making it more difficult. We have one provision here that says the President can intervene and override, in effect, if he goes through several steps, including negotiating with foreign countries. Then we have another provision--although the standard is a little bit different--that lets him do the same thing without going through all those steps.

Mr. THOMPSON. I am sorry. Since my comment was referred to, I want the Senator to be aware, if he is not, that my reference was meant to be with regard to staffing, not with regard to making the recommendations that they have made. It was with regard to carrying out the bill once it has been enacted. It has to do with personnel, people appointed by the President and confirmed. My concern is, these various departments, they have a skeleton crew of people that fit that description. So my reference to a lack of staffing has to do with their ability to effectuate the appeals process, and what have you, once this is enacted.

Mr. THOMPSON. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. THOMPSON. Yes, I will.

Mr. THOMPSON. I will be happy to.

Mr. THOMPSON. Mr. President, we have had considerable discussion about the President's authority under this proposed legislation. The point has been made that we have a fail-safe provision--that the President can always intervene and stop some item from being exported that should not be exported. But I think if you examine the legislation, you would have to conclude that through this legislation the drafters have made it difficult for the President to intervene and step in under those circumstances even in matters that constitute a threat to the national security. If you look at section 212, which gives the President the right to set aside the foreign availability status--as you recall, under this legislation, something that heretofore has been controlled required a license. If there is a determination made by the Commerce Secretary that it is a matter of foreign availability under the criterion that they come up with, it will be decontrolled. They will be able to send it to China, Russia, or any of the other what have been tier III countries in times past. But there is a provision in here that the President can step in and exercise a set-aside. Here is what the set-aside language says. It says if the President determines that decontrolling or failing to control an item constitutes a threat to the national security of the United States, and export controls an item which advances the national security interests of the United States--I will skip some of what I don't think are particularly pertinent provisions--it says the President may set aside the Secretary's determination of foreign availability. Then it goes on to say that the President may not delegate the authority provided in this paragraph. In the first place, we make it so that the President and only the President must deal with this matter, considering all the matters that he has to deal with, especially as I would again point out while he is trying to build his administration and while he is trying to get his people in place. Then the act goes on to say that the President shall promptly, if the President chooses to use their nondelegation authority, notify the Congress. He shall promptly report any set-aside determination as described along with any specific reasons for the determination to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on International Relations in the House. In other words, if the President chooses to intervene for reasons of a threat to national security, he must justify that to the Banking Committee and to the Committee on International Relations in the House. Then he must publish the determination in the Federal Registry. That is not all the President has to do. Then the President has to engage in negotiations with foreign powers. It says in any case in which the export controls are maintained on an item because the President has made a determination under subsection (a), the President shall actively pursue negotiations with the governments of appropriate foreign countries for the purpose of eliminating such availability. It may be a desirable thing. It might have been a desirable thing to negotiate with foreign countries even before somebody wanted to export something under this act to get them to try to do the right thing. But do we want to require the President to enter into negotiations with foreign countries? I assume we can do that under the separation of powers doctrine, if we choose to do so. But it is a rather significant step--all, again, under the rubric of the conditions that the President must comply with if he is going to step in and exercise this authority that we say he has to stop something from being sent abroad that constitutes a threat to the national security of this country. That is not all the President has to do. It says he then has to report to Congress. Not later than the date the President begins negotiations, the President shall notify in writing the Committee on Banking, Housing, and Urban Development of the Senate and the Committee on International Relations in the House of Representatives that the President has begun such negotiations, and why the President believes it is important to the national security that the export controls on the items involved be maintained. Again, the President is required not only to enter into negotiations but to justify to the Senate Banking Committee and to the International Relations House Committee as to why he thinks this is important. But that is not all that we impose on the President if he wants to intercede on behalf of national security because of a threat to the Nation. There is a periodic review of determination provision. It says the following: The President shall review a determination described in subsection (a) at least every six months. Here he has made this determination that this item constitutes a threat to the national security, and now he must review it every 6 months. Promptly after each review is completed, the Secretary shall submit to the committees of Congress a report on the results of the review together with the status of international negotiations to eliminate the foreign availability of the item. Again, the President has to make the review every 6 months. Then the Secretary has to go back to the committee and give them a report about the review, and then the status of negotiations. The President, through his representative, has to give the committee a status of these negotiations that have been imposed on the President. But that is not all we require the President to do in order to intervene on behalf of national security. There is an expiration of Presidential set-aside time. It says the determination by the President described in subsection et cetera shall cease to apply with respect to an item on the earlier date--that is 6 months after the date on which the determination has been made--or if the President has not commenced international negotiations to eliminate the foreign availability of the item within that 6-month period; B, the date on which the negotiations described in paragraph 1 have terminated without achieving an agreement to eliminate foreign availability; C, the date on which the President determined that there is not a high probability of eliminating foreign availability on the item through negotiation; or D, the data is 18 months after the date on which the determination described in subsection et cetera is made if the President has been unable to achieve an agreement to eliminate foreign availability within that 18-month period. In other words, after setting up all of these obligations on the President, in order for him to intervene on behalf of national security because of a direct threat to this country, the determination that has been made will go away and the thing can still be shipped unless he complies with the provisions I just read--if at the outside it is an 18-month time period, unless he can report back that they have concluded their negotiations successfully. So then it says: Action On Expiration Of Presidential Set-Aside. Upon the expiration of a Presidential set-aside under paragraph (3) with respect to an item, the Secretary shall not require a license or other authorization to export the item. Then we get to the final point. If the President, after going through this process, has not followed each of these items in any way, then the item is still shipped even though he originally made a determination that it constituted a threat to national security. My point is this. I do not particularly object to any particular provision. I have not thought about it enough, quite frankly. I did not realize yesterday we were going to be having this debate in this much detail. But my point is this. Clearly, we are making it kind of tough on the President to intervene on behalf of national security, even when there is a threat to the national security of the United States. He is going to look at this--and somebody on his behalf, hopefully, will look at it beforehand--and look at the onerous requirements, including entering into negotiations with foreign countries, reporting requirements time after time to congressional committees and certifications, in effect, as to what they are doing, giving up-to-date reports on how negotiations are going. The President has to make the determination himself because under the act you cannot delegate. He has to do it himself. This is a burden on the President. While it is true that the President, under some circumstances, can intervene on behalf of national security, it is not an easy path for the President to take. That has to do with regard to matters of foreign availability status. There is another section--I am not going to put you through the entire section 213, but there is another section called the ``Presidential Set-Aside Of Mass-Market Status Determination.'' So even though there is a determination that an item is mass marketed in this country: If the President determines that-- And I am reading from the provision-- decontrolling or failing to control an item constitutes a serious threat to the national security of the United States, and export controls on the item would advance the national security interests of the United States, or [et cetera] the President may set aside the Secretary's determination of mass-market status with respect to the item. Why it requires a threat to national security under the foreign availability set-aside, and a serious threat to the national security for the mass-market status determination, I do not know. But there is that distinction. So here, even more than was applicable in the preceding discussion we had, it focuses our attention on a matter where the President of the United States could make a determination that something is a serious threat to the national security and still ``[i]n any case in which export controls are maintained on an item . . . the President shall promptly report the determination.'' He must give reasons for the determination to the committees that I just mentioned and ``shall publish notice of the determinations in the Federal Register not later than 30 days after the Secretary publishes notice of the Secretary's determination that an item has mass-market status.'' The President shall review a determination made under subsection (a) at least every 6 months. Here is a President who has made a determination that something is a serious threat to the national security of our country, and we, as a Congress, require him to review that because we want to make sure the President did not make a mistake and say something was a serious national security threat when it was not, presumably. He is required to review it every 6 months. I quote: Promptly after each review is completed, the Secretary shall submit a report on the results of the review to the Committee on Banking, Housing, Urban Affairs of the Senate and the Committee on International Relations of the House of Representatives. So, again, my point is not that there is anything intrinsically wrong with any particular part of what I just read. It is that clearly this legislation is designed to make things more easily subject to export. It is clearly designed to decontrol even to the point where we give the President authority to step in. We are setting up several steps for the President to go through over a period of time before he can do that. So I want to make sure anyone who might be listening to this understands that, yes, the President can step in under some circumstances with regard to certain determinations but that he cannot snap his fingers, and he cannot pick up the phone, he cannot write out a memo; he has to go through a procedure that is a long-drawn-out procedure involving several steps if he wants to do that. One of the things we are going to have to ask ourselves when we deal with this in a little bit more detail is whether or not, in matters involving a serious threat to this country, it is so important for us to lower the export standards that we are not willing to give the President a little more leeway, that maybe even if he justifies it to Congress and we do not agree with him, are we not willing to give the President perhaps a little more leeway in making a determination that under the words of the statute is a serious threat to our national security? That is a serious question. That is one question that we are going to have to answer. That gets back to why we are in this Chamber today. We are still on a motion to proceed today. That is why we do not believe it is appropriate to notify us 24 hours in advance, and to try to push for a resolution of this matter in such a short timeframe, when amendments have not been fully drafted, when the Executive order that the administration is working on has not been drafted. These are serious matters, serious questions. I may be overly concerned about what I just talked about. I am not sure. I have not had a chance to really digest it. All I know is that it is not enough to say that the President can step in and, lickety-split, there is no problem; he has taken care of the problem. It is not that simple at all.

Mr. THOMPSON. I would respond to the Senator that my concentration has to do with my own obligation. I respect the members of this administration who have taken a look at this in a few days, and with the few people they have had take a look at it. I respect their opinion. I weigh it very seriously. We are another branch of Government. We have obligations also. The Senator from Texas points out that the Banking Committee has a lot of jurisdiction. That is true. The chairman of the Intelligence Committee has a lot of jurisdiction. The chairman of the Foreign Relations Committee has a lot of jurisdiction. The chairman of the Armed Services Committee has a lot of jurisdiction. They are all concerned about this. I am concerned about it. I would like to always be in agreement with all of my friends. Sometimes it is difficult to do. I referred to the Cox Commission report. As I say, he has been quoted in regard to this piece of legislation. I am not sure where he stands on this piece of legislation. I am sure he supports the Export Administration Act reauthorization, as I do, but it has been said that the bill addresses the major findings and recommendations of the Cox Commission report. Upon closer examination, many of the Cox Commission's conclusions are not addressed. For example, the Cox Commission recommended that the Government conduct a comprehensive review of the national security implications of exporting high- performance computers to the PRC. Yet S. 149 does away with that requirement. The Cox Commission also recommended reestablishing higher penalties for violations, which was done, but the evidentiary standard was lowered and promotes the sale of high-performance computers to the PRC for commercial but not military purposes provided the PRC establishes an open and transparent system to conduct on-site inspections of the end use of these machines. This bill takes these recommendations in an opposite direction. We are going to have an opportunity to go through in detail the extent to which this comports with the recommendations of the Cox Commission. The Rumsfeld Commission, of course, points out that one of the more serious concerns that we have had in Congress for some time is the proliferation of weapons of mass destruction. Even though it was significant to learn the extent to which some of these rogue nations have the ability, or rapidly developing the ability to hit the United States with missiles and weapons of mass destruction, and the fact that they were getting a lot of their capability from China and Russia, I think perhaps the most significant and troubling part was the fact that our intelligence was not aware of the extent of these things. Intelligence is not perfect--nobody's intelligence and no country's intelligence. I think they do a good job on most occasions, but they were behind the curve on this. I simply reiterate that in matters of this importance it is not something we ought to take to the floor and discuss in general terms, talk about balancing, and do in a day and a half. We need to be concerned about what else is not going to be caught by this process. We need to be concerned about the big picture, and we need to be concerned about the little details that have to do with the interagency dispute resolution. For example, as was pointed out, if someone disagrees with a determination as to whether or not an item ought to be controlled, it can be escalated by a majority vote. But it can only be escalated by someone who has been appointed by the President and has been confirmed by the Senate. Hopefully, we will have these Departments staffed. We have Defense, we have Commerce, and we have several other Departments that have a place in this. But they are grossly understaffed and will be for some time. Incidentally, the process has never been taken to the President of the United States in the history of process, if you want to know about the practical application of this thing. But it looks pretty good on paper, and maybe it can work. Do we really want to have that escalation done only by someone appointed by the President? Shouldn't he be able to delegate that somewhere for someone to handle that kind of paperwork on the thousands of the items that are going to be coming to the floor? Is the intention to make it such a high level to escalate that there will be much less escalation so that people who may have concerns and objections will not bother under that kind of a system? I think we have seen that before. We had extensive hearings before the Governmental Affairs Committee with our inspector general, who looked at all of this. They came to the conclusion at that time that the Defense Department was under the impression that there was inadequate input by the Defense Department. Will this cure that? I do not know. It looks to me as if it is more difficult under this regime to raise a question. They are supposed to be included under the bill. Are they really going to have a practical voice? Those are the kinds of things we need to look at. Again, my objection to doing this now after having learned about the consideration of it yesterday was not because I necessarily opposed the reauthorization of the Export Administration Act. I do not. The world is not going to come to an end if we don't consider this now. It has been in this condition for several years now. It can wait a little while longer until hopefully the dust settles down in terms of our relationship with some of the people to whom we are going to be sending all of these additional items. Wait until the administration becomes a little better staffed so they can deal with these things. I respect the administration and the people handling it. I respect my colleagues who have pushed this because I think they have legitimate interests in making sure we are not unnecessarily hurt in terms of our economy. But we have to make sure in the present environment--I read as well as anybody else about the tremendous interests out there that have been brought to bear on getting this done, and we have to make sure we listen to their legitimate points but that we don't lean too far too fast in that direction until we have thoroughly explored the alternatives. Hopefully, we will have some amendments that will improve upon this, and maybe we can even agree to some amendments. But, again, we are on a motion to proceed right now. It has been objected to. I agree with that objection for those reasons. This is not the kind of issue we should consider in short order and in the limited amount of time that we have now, unless we can reach some time agreement that I will agree to right now after consulting with my colleagues who have other amendments in order to have a thorough debate on this issue. It is going to come. We cannot and will not hold this up. I know which way the wind is blowing. I can guess probably what the outcome is going to be. But hopefully it will be done after a thorough and deliberate consideration in this Chamber of all of the ramifications and with a fair consideration of some amendments. Thank you, Mr. President. I yield the floor.

Mr. THOMPSON. This is very good, if I may respond. We did indeed talk about this. I was interested to see whether or not it was your view that this provision you just described did in effect override what I just read. If so--and I ask the Senator if he will agree with me--are these pages I have been discussing with regard to criteria for Presidential set-aside under 212--does that not make those requirements under 212 superfluous or irrelevant, and in what case would 212 apply when the enhanced controls provision would not apply?

Mr. THOMPSON. Mr. President, I support the chairman of the Intelligence Committee, who objected to proceeding at this time on this bill. First of all, I wish to state my reasons for supporting an objection to proceeding at this time. I do not think this bill is going to be delayed indefinitely. It is not my wish to do that. I think the Export Administration Act ought to be reauthorized. I have thought that for a long time. The question is, What is going to go in the act when we reauthorize it? We have had a vigorous bipartisan debate inside the Senate, and I would venture to say also inside the House, among our Members, as to what we ought to do about controlling or decontrolling certain sensitive items in this country. We all have the same goals, but we have markedly different views regarding certain aspects of how to achieve those goals. We now are being--after having about 24 hours' notice--asked to take up a piece of legislation which has national security implications, which is controversial, which is going to take some time in order to consider amendments which we think can benefit and strengthen the bill. It is going to take some time in that regard. It is simply not something that we should be fitting in in the middle of a week for a day, or day and a half, and either dispose of it or continue it on to another time. We ought to try to get together and set aside some time, a reasonable time--I would be in favor of a time agreement to do that--so amendments can be heard and we can debate the merits of the bill. This is not the time to do that. It is going to take more time than what we have right now. At the outset, perhaps in some respects in a very general sense, balancing our concern over commerce with national security is what we are about. But that is not what the Export Administration is all about. That is not what export controls are all about. It is pretty clear that what that is all about is national security. It doesn't say anything in this bill or anything in the legislation on the books now that we should engage in this balancing act of commerce versus national security. What it says is that you protect national security. In the bill before us, the purposes are set out. The purposes of national security export controls are the following: To restrict the export of items that would contribute to the military potential of countries so as to prove detrimental to the national security of the United States and to stem the proliferation of weapons of mass destruction. That is what this bill before us states is the purpose of these controls. That is with what we are dealing. As we proceed, I hope we do not think we should strive so hard to draw a 50-50 balance with regard to the considerations involved because they are heavily weighted, to say the least, toward national security. That, of course, is the basis of our concern. In terms of the timing, it is my understanding that a part of the administration's position is they want to draft an Executive order that will strengthen the visibility and the voice of other Federal agencies in the interagency dispute resolution process that will give the Department of Defense greater visibility and a major role in the commodity classification process and ensure that deemed exports are covered, which are not covered by this law. Those are three very important provisions that the administration says it wants to address by means of an Executive order. I think we are entitled to see that Executive order. I believe we would want to consider whether or not to make them a part of the legislation. They are very important items, as important as several of the items that are in the legislation. It is only proper, considering the severity of the issues with which we are dealing, that we have all of the cards on the table and that we deal with them in an appropriate manner. Also--and the chairman of the Intelligence Committee alluded to this--this is the wrong time to bring this up for another reason. It has broad ramifications and broad applications with regard to many different items and many different countries, but this is, in many respects, a China trade bill. Much of the impetus among the commercial world for getting this passed has to do with decontrolling previously controlled items, many of which are high-technology items, many of which have potential military application, and many of which would be going to China. They have a vast potential market. Only about 10 percent of the items we export to China are controlled items. So it is not a large part of what we are doing with them right now. Apparently the idea is, with China's concentration on high tech and their need for our supercomputers and other sensitive matters, that trade will pick up and the desire among industry is to more easily export without having to apply for a license, that trail of what granting a license entails. That is what this is all about. At a time when the Chinese leadership is issuing belligerent statements with regard to our policy toward Taiwan, right after they detained 24 American crew members and, as the chairman of the Intelligence Committee pointed out, we are feverishly trying to destroy computers aboard those airplanes and other items of hardware and software, at a time when the Chinese are engaged in a rapid military buildup and have 300 missiles on their coastline that can be used against Taiwan, at a time when they are detaining Chinese American scholars against their will, I do not think this is the time to send the message to China that we are going to engage not only in business as usual but become even more liberal in our policies of sensitive exports. We had best wait until that dust settles a little bit before we take it up. We have had a policy in this country for some time of controlling certain matters that fall into the sensitive category with regard to supercomputers, milling machinery, centrifuges, and a host of items which have dual use, both civilian and potential military use. It has always been a concern as to how far we can go in allowing civilian trade without the items being used by the military. We find from time to time, on the rare occasions we check on them, that China has diverted from civilian to military use. The Cox Commission points out to us that they are using our high technology to benefit their military. It is not that we have to speculate about that. This Congress has responded in various ways with regard to high- performance computers which can be used for simulation, for nuclear testing, reliability, and without actually doing the testing of the bombs. They can use computers nowadays to test the efficacy of their bombs by use of high-speed computers. So Congress in 1998, as a part of the National Defense Authorization Act, provided, with regard to these high-speed computers, that there should be a national security assessment to see to what extent we might be harming ourselves. That act also provided for postshipment verifications for tier III countries, such as China; in other words, to see how these computers are actually being used in China. It also required congressional review with regard to notification thresholds. We require our exporters to notify the authorities when they are doing certain things at certain levels. If the President is going to change that notification threshold, he needs to notify Congress. The bill before us would basically do away with all of those requirements and would abrogate those requirements that Congress set down in 1998. If we take these broad categories of items totally off the books and say there is no licensing at all, there will be no monitoring even of what is being shipped to whom. There will be no ability for a cumulative effect analysis. This particular item or that particular item does not have a serious effect but the cumulative effect of all of them might. That is a requirement of the law that has not been observed in the last decade, as far as I know. This is going to be the basis of the discussion. That is not to say we should not reauthorize the act. That is not to say we cannot improve and close some of these openings that I believe are unfortunate and uncalled for and deleterious to those issues on which we all agree. We hear all this talk about building bigger fences around a smaller and smaller number of items, but I do not see where the fences are. I would like to have explained to me how we are building higher fences by this act, because this is a decontrolling, in large part. There are certainly other provisions, but I see nothing where there is a tightening of the process in building higher fences. We are winding up with more openings in that fence instead of building a higher fence. Substantively, the bill before us is a good improvement over the first draft last year. We had certain concerns about it. We had a lot of discussions about it. It was vigorously defended. The administration has come in and just within a few days--they have two people confirmed in the Department of Defense right now. That is with what we are dealing. When we talk about the administration and all these various agencies that have a piece and a part of this as we go through the licensing process, let's keep that in mind. It will be the better part of a year before this administration is intact because of the scandalous difficulty we have in getting people through this process in our Government. It has been going on for a long time. A lot of these things require input of people who are appointed by the President and confirmed by the Senate. If this bill was part of the law today, as far as defense is concerned, as far as appealing something, for example, in the export control process, it would either have to be Mr. Rumsfeld or Mr. Wolfowitz because they are the only ones who fit that criteria. That is totally unworkable. Another reason not to rush is that we do not have an administration that is fully staffed in the relevant departments. One of the key provisions involves foreign availability, the idea if under the Secretary's determination, after consulting with others, the Secretary of Commerce determines there is foreign availability of an item, they will lift controls, the idea being it will not do any good to try to control that. There is probably some truth to that. It very well may be we are trying to control more than what can be controlled. The real question is not whether or not we on this side of the issue or our colleagues on the other side of the issue can sit here and determine what ought or ought not be controlled. The question is, can we come up with a procedure where on the questionable items, we know they will get full, fair, and complete consideration by people who ought to be considering the products. That is the question. We are not talking about things all over the world, through Radio Shacks around the world. Keep in mind, we are not talking about restricting any of these items from being exported. We are talking about whether we ought to have a license requirement. Most of these items are going to be exported anyway. The difference is whether or not it will take 30 or 45 days or whatever the normal amount of time is. Sometimes goods are held up longer than that. Sometimes they are held for national security reasons and this cannot be explained to the person making the application. There is a bit of delay there. In most cases it is not a great delay. Some say our competitors are so hot on our trail, our European allies are so close to us in technology that the month delay will mess up a large number of sales. That is not very credible as far as I am concerned. We have the lead in so many areas that going through the licensing process, if it goes through as it should and is supposed to, is not going to make the difference in terms of this commercial activity. We need to think through the foreign availability argument. If the genie is out of the bottle and none of these things can be controlled, why do we still have restrictions on rogue nations? If we furnish Saddam with the computers, wouldn't that be better than having somebody else furnish them, if he is going to have them anyway, or the centrifuges or the milling machines--they are sensitive--that go to make nuclear items? There are certain good arguments, good reasons to be made that he will have it anyway; why not supply it with our companies so we know exactly how it works. I find it a bit inconsistent to say none of this stuff is controllable. It is out there; you can't do anything with it. But we want to make real sure we keep these controls on rogue nations--Iran, Iraq, and the bad guys. Clearly there is a limit. Clearly there is a line. Maybe we have not drawn the line in the right place in times past. Maybe even the old end top criteria is out of date. It has been going so rapidly up it has become almost irrelevant. Many have been critical of the Clinton administration for raising it so rapidly and now it will be done away with altogether. We are having to take a new look at that. People say you cannot regulate computing power. You have to regulate or deal with the software. You have to deal with the application being made with the use of the computer. It is a different kind of world with which we are dealing. We have to be careful. While acknowledging that technology has greatly expanded and there are more things in the world that perhaps can't be controlled, there are still some areas where we do not want to open the floodgates. The question is, What are those areas and what kind of procedure will we have to ensure that those are not sent along with the rest? When we deal with thousands and thousands of items, it is not an easy answer. The President, it has been pointed out, under this bill, can have a set-aside if there is a threat to national security. On this business of balancing commercial interests over national security, get a load of this: The set-aside provides the President can take this action only if there is a threat to national security, not because it has national security implications. I assume this is a direct threat. I don't know. But the President cannot do this until there is a threat to national security. Then once he makes the determination that there is a threat to national security, he has to leap more hurdles than if he were in the average track meet. If he makes the designation, he has to report to Congress and justify himself. Then under this bill he is required to pursue negotiations to try to get the countries making this available to quit making it available. He has to notify Congress about that. Then the President has to review this matter every 6 months. Remember, this is a matter that is a threat to national security. He is required to review this every 6 months so it can be lifted if the circumstances change. He has to report that to Congress and justify not lifting it. Then the President, after having gone through all of that, if the set-aside is still standing, has to relinquish his set-aside if there is still not a high probability that there will be any changes made in terms of the foreign availability picture, and if there is no agreement under any circumstances after 18 months, the President has this authority. We make the President do a lot of things and place burdens on him to do that. As far as mass marketing is concerned, it has to be a serious threat to national security. Foreign availability, he can set it aside with a threat to national security. For some reason, if the item in question is mass marketed, just in the United States, presumably, the President has a set-aside if there is a serious threat to national security. We will want to debate and see whether or not we can improve that language, whether or not we want to set that high standard for a President to stop an export, that it has to reach that extremely high standard when we know already that the Chinese are using our high technology to benefit their military. The penalties are great in this bill. There is no question about that. But before an item has already been decontrolled, there is no danger of any penalty coming into play. My concern is this: We have a couple of basic trends going on in this country. One is that we are moving pell-mell to decontrol. The genie is out of the bottle. There is no question about that. The last administration certainly liberalized our control procedures. The Chinese and others certainly took advantage of that. We are still moving in that direction. Perhaps we should, to one extent or another. But there is no question that using the word ``decontrolling'' with regard to matters of high technology, with regard to matters of dual use, with regard to matters that have military significance, we are saying, ``What, me worry?'' and rapidly decontrolling. This would enhance that process and take it to another level.

Mr. THOMPSON. I am delighted to yield.

Mr. THOMPSON. But 212 is not discretionary. The language of 212, and in certain important respects, requires the President to do certain things--the President shall actively pursue negotiations, et cetera. So if the language remains there, it is mandatory language, and it seems there might be some inconsistency there. I am wondering whether or not one of the things we might talk about is maybe paring this thing down a little bit in terms of some of this language in that it does appear--if my friend agrees that the enhanced control provisions are overriding. It does appear that this language would be superfluous and, if it remains, would be contradictory. I am wondering if perhaps that would be the basis of some discussion.

Mr. THOMPSON. That gets back to the provisions in subsection (3) (A) (B) (C) and (D) on pages 200 and 201 in the document I think we are all looking at. It talks about the expiration of the Presidential set- aside. It says: ``A determination by the President described in subsection (a)(1)(A)(i) or (ii) shall cease to apply with respect to an item. . . .'' and it sets up conditions under which it ceases to apply with respect to the earlier of several dates. The Senator is right, there is an 18-month maximum period. If some of these things happen earlier than 18 months, it would cease to apply then, as I understand it.

Mr. THOMPSON. I am glad to.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, Section 17 of the House-passed budget resolution for fiscal year 2002, H. Con. Res. 83, contains language relating to an issue that is important to the citizens of my home State of Tennessee, and the citizens of Texas, Wyoming, Florida, South Dakota, Nevada and Washington. The issue is the deductibility of state and local sales taxes. Section 17 of H. Con. Res. 83 states that it is the sense of the House of Representatives that the Committee on Ways and Means should consider legislation to make State sales taxes deductible against Federal income tax. Earlier this year, I introduced the AMT and Tax Deduction Fairness Act of 2001, S. 291. My bill would allow individuals to deduct either their state and local sales taxes, or their state and local income taxes on their federal tax return, but not both. Currently, the federal tax laws discriminate against residents of states like mine that choose to raise revenue primarily through a sales tax, because federal law does not permit a deduction for state and local sales taxes. Federal tax law does provide a deduction for state and local income taxes, however. Prior to 1986, taxpayers were permitted to deduct all of their state and local taxes paid, income, sales and property. This deduction was based on the principle that imposing a tax on a tax is unfair. The Tax Reform Act of 1986 eliminated the deductibility of state and local sales taxes, but retained the deduction for state and local income taxes. My bill is simply intended to address this inequity in the tax code. According to a March 2000 Joint Committee on Taxation revenue estimate, the cost of allowing individuals to deduct either their state and local sales taxes or state and local income taxes, but not both, is $25.1 billion over 10 years. It was my intent to offer an amendment to the Senate budget resolution similar to Section 17 of H. Con. Res. 83, expressing the sense of the Senate that the Committee on Finance should consider legislation to make state and local sales taxes deductible against federal income tax. However, I recognize that such an amendment would be ruled non-germane under the Senate's budget rules. Therefore, I want to ask the Chairman of the Senate Budget Committee to work with me during the conference on the budget resolution to retain the House language on this issue with some minor modifications.

Mr. THOMPSON. I thank the Senator from New Mexico for his assistance.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, today I rise to introduce a resolution commending Clear Channel Communications and the American Football Coaches Association, AFCA, for their efforts to protect children by providing a vital means for locating America's missing, kidnapped, and runaway children. In 1997, the AFCA created the National Child Identification Program with a goal of fingerprinting 20 million children across the country. The AFCA began the program after discovering some startling statistics regarding missing children. The statistics showed that every year 450,000 children run away, 350,000 are abducted by a family member, and over 4,500 are abducted by a stranger. A total of 800,000 children are missing somewhere in America each year, that is one child every 40 seconds. The National Child Identification Program provides free inkless fingerprint kits for children. These kits allow parents to take and store their child's fingerprints in their own home. If ever needed, this fingerprint record can give authorities vital information to assist them in their efforts to locate a missing child. In its first year, the AFCA distributed 2.1 million child I.D. kits at college football games across the country. To date, there have been 12 million free child I.D. kits distributed. I am proud to say that many in Tennessee have contributed to this effort. Phil Fulmer, Head Football Coach at the University of Tennessee, has been an active participant in this program. With his help, the AFCA was able to distribute over 200,000 I.D. kits at University of Tennessee football games. Last year, Tennessee Governor Don Sundquist declared March 2000 as ``Child Identification Awareness Month'' and acknowledged that the program will affect the lives of children all over Tennessee. Last year, Clear Channel Communications, a Texas-based media company, partnered with AFCA to raise funds to provide 60 million schoolchildren with free I.D. kits. They have committed to raising $78 million over the next three years for this effort. This revolution gives special recognition to the American Football Coaches Association and Clear Channel Communications for their efforts. I ask my colleagues to join me in supporting this resolution.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, in 1995, the Clinton-Gore campaign began using soft money to fund candidate specific issue ads. They argued that because these ads did not use ``magic words'' such as ``vote for'' or ``vote against'' that they were not campaign ads and thus could be funded with soft money. The Republican Party soon followed suit, and the demand for soft money increased exponentially. Soft money receipts by the two major parties exceeded $260 million in 1996. There was little doubt at that point that the soft money raised by the parties was being used for campaign purposes. While addressing a group of DNC donors in 1996, President Clinton made clear that their contributions were helping his campaign, [W]e even gave up one or two of our fundraisers at the end of the year to try to get more money to the Democratic Party rather than my campaigns. My original strategy had been to raise all the money for my campaign this year, so I could spend all my money next year being president, running for president, and raising money for the Senate and House Committees and for the Democratic Party. And then we realized we could run these ads through the Democratic Party, which meant that we could raise money in twenty and fifty and hundred thousand dollar lots, and we didn't have to do it all in thousand dollars, and run down--you know what I can spend which is limited by law. So that's what we've done. But I do have to tell you I'm very grateful to you. The contributions you have made in this have made a huge difference. In addition, the President participated in strategy meetings, helping to develop ads that were funded both by his campaign and the DNC. The Final Report of the Special Investigation of the Governmental Affairs Committee contains examples of some of the sham issue ads which were clearly intended to influence the presidential campaign. The ability to use soft money to fund sham issue ads created a money chase that resulted in contributions of tens and hundreds of thousands of dollars being exchanged for access to the highest levels of government. The Final Report of the Senate Governmental Affairs Committee's year-long Special Investigation documents numerous examples of actual and apparent corruption resulting from the solicitation and contribution of soft money. I also refer my colleagues to a September 21, 2000 memorandum written by Lawrence Noble, then-General Counsel for the FEC Agenda Document No. 00-95, recommending new rules prohibiting the receipt and use of soft money by national party committees and explaining the reasons for such a proposal, including an explanation of the real and apparent corruption resulting from soft money. Revelation of the campaign finance scandals did nothing to stem the tide of soft money and its use for electioneering. In the 2000 election cycle, the parties raised nearly half a billion dollars in soft money. One study by the Brennan Center for Justice revealed that only four per cent of hard money, candidate ads in 2000 used the ``magic words'' outlined in Buckley. So the sham issue ads purchased with party soft money became virtually indistinguishable from the campaign ads paid for by hard money. In fact, according to one study, soft money has become the primary source of funding for party ads that promote the election or defeat of federal candidates. In addition, soft money was used for get-out-the-vote, voter registration, and virtually every aspect of the parties' campaign efforts in connection with federal campaigns. In short, soft money is now such an integral part of federal elections that it has effectively subverted the hard money limits in the Federal Election Campaign Act. Mr. President, I refer my colleagues to a study entitled ``The End of Limits on Money in Politics: Soft Money Now Comprises the Largest Share of Party Spending on Television Ads in Federal Elections'' by Craig Holman for the Brennan Center for Justice which further emphasizes this point. As in 1974, Congress is about to fix a campaign system that is clearly broken. The McCain-Feingold bill will restore a campaign finance system that has been completely thwarted by loopholes created in the late 1970s. Once again, Congress will prohibit union and corporate money from being used to fund campaigns. Once again, Congress will require individual contributions to be capped at reasonable levels and require disclosure. We as a Congress will once again ensure that unlimited corporate, union and individual funds will not compromise the integrity of the political process. In short, we are about to restore the campaign finance system to what was intended prior to the appearance and exploitation of the soft money loophole. In order to fix this problem, this bill contains three essential components in establishing an effective soft money ban. First, national parties are banned from soliciting, receiving, directing, transferring or spending soft money. Second, state parties are prohibited from spending soft money on federal election activities, such as ``issue ads'' that promote or attack a federal candidate and get-out-the-vote activities on behalf of a federal candidate. Third, Federal officeholders and candidates are prohibited from raising or spending soft money, or directing soft money to a party or other entity. These three provisions work together: each of them is an essential part of closing the soft money loophole and ensuing that national parties, federal officeholders and federal candidates use only funds permitted in federal elections to influence federal elections, and that state parties stop serving as vehicles for channeling soft money into federal races to help federal candidates. In the last election, for example, Republican and Democratic Senate candidates set up joint fundraising committees, joining with party committees, to raise unlimited soft money donations. The joint committees then transferred the soft money funds to their Senate party committees, which transferred the money to their state parties, which spent the soft money on ``issue ads,'' targeted get-out-the-vote and other activities promoting the federal candidates who had raised the money. As a result, soft money is currently raised by federal officeholders and candidates for political parties and then used by these parties on expenditures to help elect the candidates to federal office. In order to prevent corruption and the appearance of corruption, the bill breaks the nexus between soft money donors and federal officeholders and candidates by banning these federal officeholders and candidates, and their national party committees, from raising these funds. Under this bill, there are no restrictions on state parties raising funds under state law and using them solely to effect state elections. The only restrictions apply to circumstances where money is being used to affect federal elections and where absent those restrictions soft money would continue to pour into federal races through the state parties. In addition, McCain-Feingold includes a provision colloquially known as Snowe-Jeffords which requires disclosure for some groups running ads which mention a candidate within a certain number of days of an election. In addition, it prohibits such ads from being funded from the general treasury funds of corporations and unions. As has been pointed out by Senators Snowe and Jeffords, these sham issue ads are clearly intended as election ads and just as clearly have that effect. I refer my colleagues to the following studies which demonstrate that sham issue ads have the effect of express advocacy and should be regulated by Congress: ``Dictum Without Data: The Myth of Issue Advocacy and Party Building'' by David Magleby of the Center for the Study of Elections and Democracy at Brigham Young University; and ``A Narrow and Appropriate Response to Cloaked Electioneering: Measuring the Impact of the 60-Day Bright-Line Test on Issue Advocacy'' by Craig B. Holman for the Brennan Center for Justice. Exhibit 1 The Origins and Growth of Party Soft Money Finance (By Anthony Corrado, Associate Professor, Department of Government, Colby College, Waterville, Maine, Mar. 30, 2001) The financing of political parties has been a source of controversy for the better part of the last two decades. As major party revenues have grown from $60 million in 1976 to more than $1.2 billion in 2000, advocates of reform have issued increasingly sharp and well-grounded critiques of party fundraising practices. Most of this criticism has been directed toward party soft money finance, a specific form of funding that was not anticipated by the Federal Election Campaign Act, but emerged in the 1980s in response to a series of regulatory decisions. In recent years, soft money contributions have become a staple of national party fundraising, reaching a total of more than $487 million in 2000, or ten times more than the amount received in 1988. This type of fundraising occurs outside of the scope of federal laws, so it provides national party organizations with a means of soliciting unlimited contributions from individuals, or gifts from sources such as corporations and labor unions that have long been banned from giving money in federal elections. In recent elections, federal elected officials and national party leaders have aggressively solicited large contributions of $100,000 or more from such sources, including more than 100 gifts of more than $1 million in 2000 alone. These large sums have fueled the growth of soft money and its importance in national elections. They have also encouraged party committees to find new ways of spending soft money, including methods that Congress has not sanctioned. The flow of money in the 1996 and 2000 elections demonstrates how dramatically the world of party fundraising has changed since the amendment of the Federal Election Campaign Act (FECA) in 1974. Regulatory changes have created a new legal environment in which parties once again have access to the types of unlimited contributions that were supposed to be eliminated after Watergate. Innovations in party campaign strategies have created new approaches to spending that have encouraged national party organizations to spend unlimited amounts on election-related activities. Most important, parties have moved beyond the kinds of ``party- building'' activities specified in the FECA to place greater reliance on television and radio advertising, especially candidate-specific issue advocacy electioneering, that is financed in large part with soft money that is channeled through state party committees. Parties have thus adapted to the act's regulatory approach in unanticipated ways. These innovations and the success party committees have had in avoiding financial restraint is best understood by reviewing the evolution of the law and the ways national party committees have reacted to the new regulatory regime. The Rise of Soft Money FECA limits on party funding were first put into effect in the 1976 elections, and questions about the legal status of different types of party financing immediately arose. Traditionally, party organizations had spent significant sums on activities such as voter identification efforts, get-out- the-vote programs, generic party advertising (messages like ``Vote Democratic'' or ``Support Republican Candidates''), and the production of bumper stickers, buttons, and slate cards, that might indirectly benefit federal candidates but did not constitute direct assistance to a particular candidate. Were these expenditures governed by the new spending ceilings? Under the act's original guidelines, the costs of many of these activities, especially grass-roots campaign materials such as bumper stickers, lawn signs, and slate cards that mentioned particular federal candidates, could be considered in-kind campaign contributions subject to the law. This became a particular concern in the 1976 presidential race, because the public funding program established by the FECA prevented the party nominees from accepting campaign contributions in the general election period. As a result, party leaders had to rely on presidential campaign funds for election-related paraphernalia. Yet both presidential campaigns chose to concentrate their limited resources on media advertising rather than gross-roots political activities. As a result, party leaders complained after the election that the FECA had indirectly limited traditional grass-roots and party-building activities, thus reducing the role of party organizations in national elections. The 1979 FECA amendments: Expanding hard money spending Congress responded to these concerns by accepting a recommendation made by the Federal Election Commission to ease the restrictions placed on party contributions and expenditures. The new rules, which were included in the 1979 FECA amendments, changed the legal definition of ``contributions'' and ``expenditure'' to exclude the amounts spent on certain ``grass-roots'' political activities, provided that the funds for those activities were raised in compliance with FECA. This change was designed to allow state and local party organizations to pay for certain specified activities that might indirectly benefit a federal candidate without having to count this spending as a contribution or expenditure under the act. Its purpose was to encourage state and local parties to engage in supplemental campaign activity in hopes of promoting civic participation in the elections process. In changing the law in 1979, Congress sought to allow party committees to spend unlimited amounts of hard money on certain, limited types of election-related activity, which were clearly specified in the law. It did not allow national party organizations to receive unlimited contributions or to accept corporate or labor funds. It did not allow ``soft money.'' Any gifts received by a national party committee were still subject to the limits established in 1974. The 1979 revision thus did not create ``soft money''; it simply exempted any federal monies (``hard dollars'') a party committee might spend on certain political activities from being considered a contribution to a candidate under the law. Furthermore, the activities that were to be considered exempt under this provision were narrowly defined. Basically, the 1979 law specified three types of state and local party activity that committees may undertake and noted certain restrictions that govern the conduct of these activities. These activities did not include the use of mass public political advertising. First, state and local party committees were allowed to pay for grass-roots campaign materials, such as pins, bumper stickers, brochures, posters, yard signs, and party newspapers. These may be used only in connection with volunteer activities and may not be distributed by direct mail or through any other general public advertising. These materials may not be purchased by national party committees and delivered to the local committees or paid for by funds donated by national committees for this purpose. Nor may a donor designate funds for this purpose to be used to purchase materials for a particular federal candidate. Second, state and local party committees were allowed to prepare and distribute slate cards, sample ballots, palm cards or other printed listings of three or more candidates for any public office for which an election is held in the state. Third, state and local party committees were allowed to conduct voter registration and turnout drives on behalf of their parties' presidential and vice-presidential nominees, including the use of telephone banks operated by volunteers, even if they are developed and trained by paid professionals. However, if a party's House or Senate candidates are mentioned in such drives in a more than incidental way, the costs of the drives allocable to those candidates must be counted as contributions to them. Congress clearly noted that this exemption did not extend to broadcast advertising. In permitting the production of certain types of campaign materials and in sanctioning expenditures on voter drives, the act specifically noted in Section 431 that these activities could not involve the use of any broadcasting, newspaper, magazine, billboard, direct mail, or similar type of general public communication or political advertising. In other words, the Congress specifically did not allow the use of mass public political advertising under the exemption established in 1979. Congress thus gave party organizations broader leeway to spend federal funds with respect to election-related activities. In addition to direct contributions and coordinated expenditures, party organizations could spend unlimited amounts on voter registration and identification, certain types of campaign material, and voter turnout programs. Congress supported this revision because these tasks were considered important ``party-building'' activities that would help develop organizational support for party candidates and promote citizen participation in electoral politics. FEC Regulatory decisions: Opening the door to soft money So in 1979 Congress authorized a circumscribed realm of unlimited party expenditures. But it did not sanction unlimited spending on activities designed to assist a particular candidate for federal office. Nor did it open the door to unrestricted fund-raising or party committee receipt of corporate or labor donations. Instead, it was the Federal Election Commission, the agency empowered to enforce the law, that changed the rules governing party fundraising and gave birth to a new form of funding: soft money. The provisions of the act had raised another major issue with respect to party financing: how to accommodate the federal and nonfederal roles of party organizations. The act imposed limits on party financing for all activities conducted in connection with federal elections. But party organizations also play a significant role in nonfederal elections--gubernatorial races, state contests, legislative elections, and campaigns for major local offices. Their financial efforts in these races are governed by state campaign finance laws,which are generally much more permissive than federal law. For example, most states allow parties to accept corporate and labor union contributions, and, as of 1992, sixteen states had placed no limit on individual gifts, while nineteen had no limits for PAC giving. National party organizations could thus receive contributions for nonfederal purposes that are not allowed in federal elections. The issue of nonfederal party funding first arose in 1976. The Illinois Republican State Central Committee asked the FEC for guidance on how to allocate nonfederal and federally regulated funds in paying some of their general overhead and operating expenses, as well as the expenses of voter registration and get-out-the-vote drives that would benefit both federal and nonfederal candidates. The party sought the FEC's opinion in part because Illinois allowed corporate and labor contributions that were not permissible under federal law. In its Advisory Opinion 1976-72, the FEC clearly stated that corporate or labor union money could not be used to finance such federal election--related activities as a voter registration drive: ``Even though the Illinois law apparently permits corporate contributions for State elections, corporate/union treasury funds may not be used to fund any portion of a registration or get-out-the-vote drive conducted by a political party.'' However, the Commission did approve the use of nonfederal funds to finance a portion of the party's overhead and administrative costs, since these costs--for example, rent, utilities, office supplies, salaries--supported the administration of activities related to both federal and nonfederal politics. The agency approved an allocation formula based on the proportion of federal to state elections being held that year, with greater weight given to federal races. To pay these costs, the Illinois party had to establish separate federal and nonfederal accounts; the federal account could be used only to accept contributions permissible under the act, and the nonfederal account solely for monies allowed under state laws. The proportionate share of administrative costs would be paid from the relevant account; that is, the federal election-- related share of the costs would be paid from the federal account, and vice versa. The FEC's attempt to hold the line on corporate contributions was short-lived. Less than two years after their 1976 advisory opinion, the Commission again faced the issue of corporate and labor funding of party voter mobilization efforts. This time the Republican State Committee of Kansas sought the Commission's approval to use corporate and union funds, which were legal under Kansas law, in a voter drive that would benefit both federal and state candidates. Specifically, the Kansans asked the Commission how they should allocate funds between federal and nonfederal funds for their voter registration and get-out-the-vote efforts. In a surprising ruling, two Republican commissioners switched their earliest positions and joined two Democrats in approving Advisory Opinion 1978-10, which reversed the 1976 decision. Instead of prohibiting the use of corporate and union money, the agency declared that the Kansas party could use these funds to finance a share of their voter drives, so long as they allocated their costs to reflect the federal and nonfederal shares of any costs incurred. The decision thus opened the door to the use of nonfederal money on election- related activity conducted in connection with a federal election. Commissioner Thomas E. Harris, a Democrat, believed so strongly that the ruling violated both the letter of the law and Congress's intent in framing the act that he took the unusual step of filing a written dissent. In it, he noted that there would normally be more state and local races than federal races taking place in a state, so most of the costs of voter drives could be financed from monies not permissible under federal law. His point was not lost on party leaders, who quickly began to adapt their financial strategies to take advantage of the new opportunities inherent in the FEC's decision. The FEC's 1978 ruling was issued in response to a state party request. The idea was to recognize the role of state party committees in federal elections and the different contribution rules that might apply to state parties under state laws. But the national party committees argued that the ruling should apply to their activities also, since, like state party committees, they were involved in both federal and nonfederal politics. National parties serve as umbrella organizations that work with party leaders and elected officials at all levels of government. They make contributions and provide campaign assistance to federal, state, and local candidates. They work with state and local party organizations on a variety of party-building and election-related activities. National party leaders therefore argued that they too could allocate administrative costs and other expenses between federal and nonfederal funds, so long as they maintained federal and nonfederal accounts to handle the different types of money. In this way, they could use nonfederal funds for their nonfederal election activity. So just at the time that Congress was allowing party organizations to spend unlimited amounts of money raised under federal rules on voter programs and other activities, the FEC was allowing them to pay a share of such costs with funds not subject to federal limits. These two streams of regulatory change converged in the 1980 election, leading to widespread use of nonfederal money at the federal level. the growth of soft money During the 1980 election cycle, national party organizations began to raise soft money from corporations, labor unions, and individuals who had already given the maximum amount allowed under federal law. A share of these funds were used to defray a portion of the national party committees' administrative costs, as well as the expenses incurred in raising nonfederal monies. They were also used to pay a proportionate share of the costs of voter targeting and turnout programs designed to assist the presidential ticket or federal candidates engaged in strategically important state contests. In many instances, the national party organizations raised the funds needed to pay for these programs and transferred the amounts to state party committees that actually conducted the voter drives, sometimes with assistance from organizers recruited by the national party committees. This nonfederal funding quickly became known as ``soft money,'' because it was not subject to the ``hard'' limits of federal law. National committees could solicit unlimited amounts from donors throughout the country, and then use the money to pay their own costs or redistribute these funds to those states where they were considered most necessary. As long as the contributions were legal under state law, the gifts were permissible. So a national party fundraiser could solicit $1 million from a donor and use the monies for a variety of purposes, or even transfer the entire amount to a state that had no limits on political contributions. In essence, the new rules gave party organizations a green light to engage in unrestricted fundraising. National party committees quickly took advantage of the relaxed regulatory environment. The only question remaining for party officials was how to allocate soft money with respect to different activities. The FEC took the position that party committees could allocate funds on any reasonable basis. By 1982, when the DNC requested the FEC's guidance on how to pay for a party midterm conference, the agency had approved at least four methods of allocation and afforded party committees notable leeway in selecting their approach. Party committees could thus increase their use of soft money by selecting the allocation method that permitted the greatest nonfederal share. As a result, soft money became a substantial component of national party finance in the 1980s. How substantial a component is difficult to determine, because these funds were not subject to federal disclosure laws. National party committees were only required to report their soft money receipts and expenditures in the states where the money was spent, where disclosure requirements were often either nonexistent or wholly ineffective. It is therefore impossible to determine the exact amounts raised and spent by the national party organizations. The best available estimates suggest that the two major parties spent $19.1 million in soft money during the 1980 election cycle, with the Republicans spending $15.1 million and the Democrats $4 million. In 1984, they received an estimated $21.6 million, with the Republicans once again outpacing the Democrats by a margin of $15.6 million to $6 million. Most of this money was spent on voter registration drives and turnout programs conducted by state party committees. These efforts were targeted to focus on key battlegrounds in the presidential race. By 1988, soft money had become a focal point of public attention, as both parties escalated their soft money fundraising. The two national parties raised a total of $45 million in soft money, more than twice the amount raised in 1988. The Democrats raised $23 million and the Republicans $22 million. This success was largely due to the emphasis both parties placed on donors of $100,000 or more. In voluntary disclosures made after the election, the Republicans claimed to have received $100,000 gifts from 267 donors, while the Democrats counted 130 donors who gave $100,000 or more. In 1992, both parties generally followed the approaches established in 1988. They continued to raise soft money funds aggressively and sought contributions of $200,000 or more from their top donors. They also placed substantial emphasis on the solicitation of corporate gifts, with the largest corporate donors often giving money to both parties. As a result, the amount of soft money continued to grow at a dramatic rate. In all, the national party committees raised about $80 million in soft money. This included substantial amounts of soft money that were raised by the national senate and congressional campaign committees. While the Democratic Senate Campaign Committee continued to raise soft money only for its building fund, the other committees began to mount extensive soft money operations. In all, these committees raised more than $20 million in soft money, including $4.7 million by the Democratic Congressional Campaign Committee, $6.3 million by the National Republican Congressional Committee, and $9 million by the National Republican Senatorial Committee. Both national committees adopted strongly centralized approaches in administering these funds in an effort to maintain control over the ways soft money was spent. Even in the case of monies transferred to state and local party organizations, the national committees allowed little autonomy with respect to how the funds were to be spent. In most instances, transferred funds were to be used on projects approved by the national organization. Most of the soft money spent in 1992 was spent in ways designed to support the election of federal candidates. The major share of the soft money raised in both parties was devoted to joint activity, that is, to activities that were designed to influence federal and nonfederal elections. Examples of such activities include the costs of fundraising efforts designed to raise soft and hard money; the administrative expenses associated with soft money operations; the monies paid for generic campaign materials and advertisements that say ``Vote Democratic'' or ``Vote Republican''; and expenses for phone banks and other voter identification and turnout projects that assist party candidates at all levels. The most prominent form of joint activity was generic advertising, especially television advertising. While voter turnout programs remained the most important component of the party activities, both parties invested heavily in generic television ads that were designed to bolster the prospects of their candidates. These ads were financed with a combination of hard and soft money. Overall, the Democrats spent about $14.2 million on ads and the Republicans spent about $10 million. The Republicans basically followed the strategy employed in previous elections, since they had previously spent substantial sums on generic advertising. For the Democrats, however, this emphasis on party advertising represented a new approach to general election campaigning. While the party did broadcast some ads in 1988, the total amount spent was only $1 million. Many of the ads broadcast by the party committees were designed to reinforce the message of the party's presidential nominee. The Democrats, for example, used soft money to finance ads that did not mention Bill Clinton directly (since this was thought at the time to be a violation of federal law) but did hammer home the message on the economy that was the foundation of Clinton's campaign. These ads also helped to free up resources that the Clinton campaign could use for other purposes. During the last week of the campaign, for instance, the Clinton campaign was running tight on money and thus decided to use campaign resources to buy a half-hour of national television time as opposed to additional broadcast time in the highly competitive state of Texas. The campaign, however, did not leave Texas unattended; instead, the national committee broadcast generic ads in the state to spread the party's message. The Bush campaign adopted a similar strategy, relying on party ads to shore up support in traditional Republican strongholds and in crucial battleground states like Texas and Florida. Parties also raised soft money as a vehicle for providing direct financial assistance to state and local committees. In 1992, about a quarter of the funds raised nationally by the two major parties were transferred to state and local party committees. These funds provided state and local party organizations with the resources needed to conduct activities that they would otherwise not be able to afford. These funds are often used to purchase, update, and computerize voter lists; to develop targeting programs; to pay fundraising expenses; and to hire party workers and poll watchers on election day. While both parties spent money on these types of activities in 1992, the bulk of the funds transferred to state parties were used for generic phone bank programs designed to identify party supporters and turn out the vote. According to FEC disclosure reports, most of the state party organizations received a share of the soft money funds raised by their respective national party committees. The Democrats transferred almost $9.5 million in nonfederal funds to 47 states. Federal funds were sent to all 50 states. With this hard money added, the total amount sent to state committees was $14.3 million. The Republicans sent about $5.3 million in nonfederal monies to 42 states and about $3.5 million in federal funding to 43 states, for a total of about $8.8 million. Most of the soft money sent to state committees was focused on a small group of targeted states that were considered essential to a presidential victory. The Democrats disbursed two-thirds of the nonfederal funds sent to states in ten key electoral battlegrounds. These ten states, which contained 219 electoral college votes or 81 percent of the total needed to win, included most of the large electoral states and three crucial Southern states that the Democrats thought they could win--Georgia, Louisiana, and North Carolina. The Republicans also disbursed two-thirds of their transfer funds in ten states. These states, which contained 190 electoral votes or 70 percent of the number needed to win, also included a number of large states and three key Southern contests. The Republican senate and congressional committees transferred about $3.2 million to state party committees, as compared to less than $34,000 transferred by the Democratic senate and congressional committees, most of which was sent to states with open Senate races. the federalization of soft money financing By the end of the 1992 election cycle, both national parties had become adept at raising soft money and using these funds to assist federal candidates. While some comparatively minor sums of soft money were used to make contributions to state and local candidates or assist state parties in their efforts to mobilize voters for nonfederal contests, the vast majority of these monies were being raised and coordinated by the national party committees and spent in ways that would influence the outcome of federal elections in targeted states. The parties had learned to use soft money as a central component of their federal campaign efforts. They relied on these funds to supplement the public funding in presidential races and the hard monies solicited by Senate and House candidates. For all intents and purposes, soft money primarily had become part of a system of federal election financing that included a state and local component, rather than a method of state and local political finance that also influenced federal elections. In 1996, the importance of soft money in the financing of federal elections became even more important as parties changed their strategies and began to place great emphasis on the use of candidate-specific issue ads. This type of advertising provided parties with a way of using soft money to pay for broadcast advertisements that featured specific federal candidates. The parties claimed that such ads are not federal campaign expenditures and thus may be paid for with a combination of hard and soft money funds. In 1996, the use of such ads, which was spurred by the efforts of the Democratic Party to bolster President Clinton's prospects for reelection, was a bold innovation. It represented an aggressive effort to push the limits of the FECA restrictions and circumvent the contribution and spending limits established by the law. In the intervening four years, this innovation has become the standard practice, the new norm for how party committees conduct their federal election campaigns, and a major factor in the continued growth in soft money fundraising. While the national party organizations had engaged in issue advocacy advertising before the 1996 election cycle (most notably during the debate over Clinton's health care proposal in 1993 and 1994), they had never before used such advertising in a significant way to promote a presidential candidate in an election year. But the Democrats quickly recognized the potential benefits of this tactic. The ads could be used to deliver the President's basic message, policy proposals, and accomplishments, and criticize Dole's views and record. As long as they avoided the ``magic words'' that would trigger the definition of express advocacy, none of the monies spent in this way would be considered ``campaign spending'' under the law. It was a loophole in the federal regulatory scheme that the Democrats aggressively exploited. For a year, July 1995 to June 1996, the Democratic National Committee (DNC) and state Democratic party organizations spent millions of dollars on ads designed to promote Clinton's reelection. These spots were mostly aired in smaller media markets where broadcast time is less expensive. The party avoided states where Clinton had won by large margins in 1992, and also stayed away from those states where they felt Clinton had no chance--Texas, the Great Plains states, and Southern Republican strongholds like South Carolina and Virginia. In the fall of 1995, the Democrats ran ads attacking the Republican budget that covered 30 percent of the media markets in the country. By the end of December, they had run ads presenting Clinton as a leader seeking tax cuts, welfare reform, a balanced budget, and protection for Medicare and education programs. In all, the Democrats had aired pro-Clinton ads in 42 percent of the nation's media markets by January 1, 1996, at a cost of $18 million, none of which was drawn from Clinton's campaign committee accounts. According to estimates by Common Cause, the Democrats spent $34 million on pro-Clinton ads during this period. This included $12 million in federally regulated ``hard money'' and $22 million in soft money. The DNC managed to spend such a large proportion of soft money by transferring funds to state party committees and having these communities purchase the ad time. In other words, they were able to pay for the ads mostly with soft money because the FEC has different payment regulations for national and state party organizations. This perfectly legal act of subterfuge allowed the party to conserve its hard money, which is particularly valuable because it is more difficult to raise than soft money. The Democrats focused their ad campaign on twelve key general election battleground states. The party spent over $1 million in each of these states, including over $4 million in California. Combined, these twelve states represented a total of 221 electoral college votes. Clinton eventually won all of them except for Colorado. The DNC's spending and Clinton's financial advantage entering the final months of the campaign encouraged the Republican National Committee (RNC) to adopt a similar strategy as soon as its presidential nominee was determined. In May, one day after Dole decided to resign from the Senate to devote himself to full-time campaigning, RNC Chair Haley Barbour announced a $20 million issue advocacy advertising campaign that would be conducted during the period leading up to the Republican national convention in August. The purpose of this campaign, said the chairman, would be ``to show the differences between Dole and Clinton and between Republicans and Democrats on the issues facing our country, so we can engage full-time in one of the most consequential elections in our history.'' In essence, the campaign was designed to assist Dole, who had basically reached the public funding spending limit, by providing the additional resources needed to match Clinton's anticipated spending in the remaining months before the nominating conventions. By the end of June, the RNC had already spent at least $14 million on ads promoting Dole's candidacy, including an estimated $9 million in soft money. Like the Democrats, the Republicans focused their spending on key electoral college battlegrounds. Indeed, the ``target'' list looked very similar to that of the Democrats; eight of the top twelve states were the same for both parties. This innovative form of party spending essentially rendered the contribution and spending limits of the FECA, at least as far as the party nominees were concerned, meaningless. So long as the party committees did not coordinate their efforts with the candidate or his staff, and did not use any of the ``magic words'' that would cause their spending to qualify as candidate support, they were free to spend as much as they wanted from monies received from unlimited sources on activities essentially geared towards influencing the outcome of the presidential race. Given the availability of polling data and other sources of political information, it was simple for the parties to develop ads that reflected their respective candidates' major themes and positions or presented the most effective attacks against the opponent. Moreover, this use of soft money gave the party organizations a strong incentive to solicit greater and greater amounts of soft money. Instead of spending one dollar in hard money for a dollar in advertising done as a coordinated expenditure, a national party committee could spend one dollar in hard money to trigger, on average, an additional two dollars in soft money spending. So they were able to get more advertising out of their hard money by relying more heavily on soft money. The tactic thus placed a premium on soft money fundraising. A party could into spend as much soft money as it could raise because these funds could be used for television advertising that featured the candidate and essentially advocated his election. In 1996, the national party committees raised over $260 million in soft money, more than three times the sum amassed in 1992. Yet this substantial sum paled in comparison to the $487 million garnered in 2000. The parties raised such large sums because the bold innovation undertaken in 1996 was essentially sanctioned by the events following that election. Although the FEC audit division and general counsel's office found that the party issue advertising campaigns should be considered campaign expenses and counted against the presidential campaign's spending and contribution limits, the FEC failed to accept their recommendations and did not take action against the parties or the presidential candidates for their acts of subterfuge. Consequently, the parties had even greater incentive to engage in issue advertising efforts financed with soft money. And they made the most of this opportunity. Exactly how much soft money was spent to assist federal candidates through advertising or other means is difficult to determine due to the inadequacy of the disclosure requirements applicable to national party committee soft money finances. But it is certainly true that the vast majority of the soft monies raised in 2000 were used to assist federal candidates and that the largest expenditures took the form of issue advertisements that featured federal candidates and were broadcast in close proximity to Election Day. The national party committees together spent $79.1 million on television advertising in the presidential campaign in the top 75 of the nation's 210 media markets, as compared to $67.1 million spent by the candidate themselves. According to an analysis by the Brennan Center for Justice of these top 75 media markets during the period from June 1 to November 7, the Bush campaign devoted $39.2 million to television advertising, while the Republican National Committee spent $44.7 million. On the Democratic side, the Gore campaign spent $27.9 million on television advertising, while the Democratic National Committee expended $35.1 million. As in 1996, most of the funding came from soft money that the national party transferred to state parties, since under FEC guidelines, state parties were able to use a greater percentage of soft money when buying television time if it was purchased by state party committees. This was in accord with FEC rules, which place different allocation requirements on state party committees. These expenditures, therefore, were not designed to strengthen state and local parties; they were simply made through state or local party financial accounts to take advantage of the opportunity to spend soft money. The Democrats were the first to resort to issue advocacy spending, airing their first ad in early June, despite the fact that Gore had earlier said the Democrats would not run soft-money financed advertising unless the Republicans did so first. In announcing the advertising strategy, the Democrats cited what they estimated to be $2 million in anti-Gore advertising by political groups that favored Bush, including a group called Shape the Debate and a missile defense organization called the Coalition to Protect America Now. The ad, which touted Gore's commitment to fight for a prescription drug benefit for seniors, ran in 15 states and was financed with a combination of hard and soft money. Once the Democrats had begun their assault, the Republicans were quick to follow. Only a few days after the Democrats launched their ads, the Republicans announced a campaign of their own. On June 10, the Republican National Committee unveiled a $2 million ad campaign targeted mainly in the same presidential battlegrounds as the Democratic television buy. The only difference was that the Republicans also purchased time in Maine and Arkansas. This first commercial presented Bush's proposal to allow workers to invest part of their Social Security payroll taxes in the stock market. What was most notable in 2000, however, was the significant rise in the use of soft money by the national senate and congressional campaign committees. Almost half of the soft money raised in this election, almost $214 million, was raised by the congressional committees. This sum is ten times greater than the $20 million in soft money raised by these committees in 1992. The Democratic Senatorial Campaign Committee raised $63 million in soft money, while the Democratic Congressional Campaign Committee raised almost $57 million. The National Republican Senatorial Committee solicited $43 million in soft money and the National Republican Congressional Committee, about $51 million. About half of the soft money raised by the senatorial and congressional committees, $108 million, was transferred to state and local party committees to pay for issue advocacy advertising and voter turnout programs conducted in connection with targeted House and Senate races. According to the Brennan Center analysis, in the top 75 media markets, the parties spent nearly $40 million on advertising in House races, with the Democrats spending $22.7 million and the Republicans, $16.8 million. In connection with Senate races, the parties spent an additional $39 million, including $21.4 million by the Democrats and $17.7 million by the Republicans. Tens of millions more was spent on voter identification and turnout efforts. Most of the money spent on these activities was in the form of soft money. So even the national party committees formed for the purpose of electing candidates to the House and Senate have become soft money operations. conclusion By the election of 2000, national party soft money was being used to finance every aspect of a party's campaign efforts in connection with federal contests. It is being used to produce candidate-specific ads and broadcast them on television and radio. It is being used to produce campaign materials such as posters and slate cards that feature federal candidates. It is being used to register, identify, and mobilize voters who support federal candidates. It is therefore not surprising that the party committees have made soft money fundraising a major component of their financial efforts. In every election cycle since its advent, the majority of soft money has been allocated to finance activities that are primarily designed to influence the outcome of federal elections. Exhibit 2 Common Cause, Washington, DC, November 5, 1984. Lee Ann Elliott, Chair, Federal Election Commission, Washington, DC. Dear Commissioner Elliott: I am writing on behalf of Common Cause to express our deep concern about the improper role that ``soft money'' has been playing in federal campaigns and about the Federal Election Commission's inattention to this very serious problem. It appears that ``soft money'' is being used in federal elections in a manner that violates and severely undermines the contribution limits and prohibitions contained in the federal campaign finance laws. While these practices and abuses have received considerable public attention, the Federal Election Commission to our knowledge has failed to take any formal action in this area. In using the term ``soft money'' we are referring to funds that are raised by Presidential campaigns and national and congressional political party organizations purportedly for use by state and local party organizations in nonfederal elections, from sources who would be barred from making such contributions in connection with a federal election, e.g. from corporations and labor unions and from individuals who have reached their federal contribution limits. According to various press reports and public statements, including statements by campaign and party officials, it appears clear that ``soft money'' in fact is not being raised or spent solely for nonfederal election purposes. Such funds are being channeled to state parties with the clear goal of influencing the outcome of federal elections. [The complaint filed by the Center for Responsive Politics, for example, sets forth a clear example of the use of ``soft money'' for federal purposes in the 1983 special Senate election in the State of Washington.] Under the federal campaign finance laws ``soft money'' is prohibited from being spent ``in connection with'' federal elections. There is no question that ``soft money'' currently is being spent ``in connection with'' federal elections, if that term as used in the federal campaign laws is to be given any realistic meaning. If the Commission leaves such ``soft money'' practices unchecked it will be implicitly sanctioning potentially widespread violation of the current federal campaign finance laws. Soft money practices are facilitating the reemergence in national political fundraising of campaign contributions from sources such as corporations and unions that have been prohibited for decades from providing such funds for federal elections. They are similarly facilitating the reemergence of large individual campaign contributions that have been prohibited since 1975. These contributions are highly visible to national campaign and party officials notwithstanding their purported use by state party organizations for nonfederal election purposes. When national campaign and party officials who work with federal candidates raise and coordinate or channel the distribution of ``soft money'' to state organizations, the potential for corruption is exactly the same as it was when those national campaign and party officials directly received that kind of money. If the Commission leaves soft money practices unchecked, it will directly undermine a core protection against corruption in the federal campaign finance laws. Soft money practices are also undermining the disclosure provisions of federal campaign finance laws. Very substantial sums of money are being channeled to and through state parties in order to influence federal elections without these sums being disclosed as contributions or expenditures under the federal law. A primary purpose of the federal campaign finance laws is to open the political financing process to public scrutiny. If the Commission leaves soft money practices unchecked, it will allow the national campaigns and political parties to potentially hide millions of dollars in federally related campaign funds from public view, thereby creating widespread opportunities for actual and apparent corruption. Furthermore, in presidential campaigns, ``soft money'' returns private funds to a potentially prominent role and thereby subverts the purpose of the presidential public financing system. In 1979, Congress amended the federal campaign finance laws to permit state parties to spend money in connection with presidential campaigns, but only for certain limited purposes and only with funds subject to the limitations and prohibitions of the federal law. Congress did not intend to authorize centralized national fundraising of private funds from proscribed sources to supplement the presidential public financing system. If the Commission leaves soft money practices unchecked, just that will continue to occur. Common Cause believes that it is essential for the Commission to make the ``soft money'' problem a top priority in carrying out its statutory responsibility to enforce the federal campaign finance laws. The Commission's current approach, which appears to be limited to sporadic policing of political committee account allocation rules, is totally inadequate. We therefore strongly urge that the Commission promptly take the following steps: (1) initiate on a priority basis its own broad-ranging factual investigation into soft money practices, with a view toward prosecuting actual past violations; (2) initiate a rulemaking proceeding to establish what broader administrative tools, such as additional disclosure requirements, are needed to facilitate the Commission's effective enforcement of the current laws; and (3) undertake a review of the current laws to determine what additional statutory remedies may be required to assure that soft money abuses are most effectively curtailed. ``Soft money'' is a very serious problem. The Commission must address it aggressively. It is not sufficient for the Commission, in this or other key areas, to sit back and wait for the private parties to bring these matters of enforcement responsibility to its attention. The Commission must be out in front of, not forced into, these issues. Sincerely, Fred Wertheimer, President.

Mr. THOMPSON. Mr. President, this is a good day for the Senate. It demonstrates once again that this body can respond to its public's needs. Even the casual observer must agree that our change from a system of the small contributor to the huge contributor is not good for this country. To those who say we are launching off into uncharted waters, that we are unsure how this might affect us as politicians or our political committees in Washington, I say that we as elected officials can never be harmed if our country is benefited. We as elected officials can never be harmed if we are doing something that increases the public trust. And if we are, Mr. President, so be it, because we must know that we are doing the right thing. Mr. President, twenty-seven years ago Congress decided to fix a campaign finance system that was clearly broken. The American public was scandal-weary and increasingly cynical about the integrity of the political process. In 1974, the President signed into law the Federal Election Campaign Act. Unions and corporations had long been prohibited from contributing to campaigns, and that year Congress decided to limit the amount of money an individual could give to candidates and parties to avoid corruption, and just as important, the appearance of corruption, in our system. Those limits on contributions were upheld by the Supreme Court in Buckley v. Valeo. The Court stated, ``[T]he Act's primary purpose--to limit the actuality and appearance of corruption resulting from large individual financial contributions--[provides] a constitutionally sufficient justification for the $1,000 contribution limitation.'' The Court also upheld the constitutionality of limits on contributions to political parties. The Court found such limits serve to prevent evasion of the $1,000 limitation on contributions to candidates by an individual ``who might otherwise contribute massive amounts to a particular candidate through the use of unearmarked contributions to political committees likely to contribute to that candidate or huge contributions to the candidate's political party.'' Just last year, the Supreme Court reaffirmed the position it took in Buckley. In Nixon v. Shrink Missouri PAC, the Court upheld an individual contribution limit of $1,050 under Missouri law and found, ``[T]here is little reason to doubt that sometimes large contributions will work actual corruption of our political system, and no reason to question the existence of a corresponding suspicion among voters.'' In the years following the passage of FECA, amendments to the Act and certain FEC regulations and rulings attempted to clarify the law, particularly as it related to state parties. Mr. President, I ask unanimous consent that the a statement by campaign finance expert and scholar Tony Corrado, a professor at Colby College, that explains thoroughly the origin and rise of soft money, be printed in the Record.