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DNC Alters Soft-Money Rules As Clinton Pushes for Reform

By Dan Balz and Peter Baker
The Washington Post

Democratic National Committee officials announced Tuesday that the party will no longer accept contributions from foreign nationals or the American subsidiaries of foreign corporations and will put a $100,000 cap on all future "soft-money" donations.

The DNC's actions, designed to prevent the kinds of abuses that occurred during the 1996 campaign and have enmeshed it in controversy, came as President Clinton sought to seize the initiative on the politically charged issue by urging the Republican-controlled Congress to pass campaign-finance legislation as quickly as possible.

Clinton once again threw his support behind a bill sponsored by Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.) that would restrict political action committees, ban the large, unregulated contributions to political parties known as soft money, and create voluntary spending limits for candidates.

"It is tough, it is balanced, it is credible," Clinton said in a speech before the DNC members. "It should become the law of the land." The president also warned that "delay will mean the death of reform."

For months, Clinton and Vice President Gore have tried to distance themselves from the problems at the DNC, carefully distinguishing between its fund-raising operation and that of their re-election campaign. In a recent interview, Gore was asked to explain why he and the president made such a distinction when they appointed the committee's two top officials. After a long pause, Gore responded: "The DNC is a different entity from the campaign, and that's a fact."

White House Press Secretary Mike McCurry said Tuesday that the president's motivation to push for reform legislation grows in part out of his recognition of the Democrats' problems last year.

Clinton went further, suggesting that it is the Republicans who should bear more blame for abusing the system. "They raise more money, they raise more foreign money, they raise more money in big contributions, and we take all the heat," he said. "It's a free ride."

Jim Nicholson, the new chairman of the Republican National Committee, responded with a statement questioning Clinton's sincerity. "Clearly, before any serious discussion about campaign finance reform can take place, there must be a commitment to abiding by the current law of the land," he said. "Clinton's speech to the DNC today on campaign finance reform brought to mind the old expression: Physician, heal thyself."

The DNC fund-raising abuses are now under investigation by the Justice Department investigation and will be the subject of Senate hearings.

DNC officials had already announced its intention to tighten up internal procedures for reviewing contributions to assure that the party remained within the law. But Tuesday's actions also included voluntary restrictions on contributions that go farther than the law requires.

Outgoing Democratic National Committee chairman Don Fowler said that even though it is legal, the party will not accept money from non-citizens who are are permanent residents in this country. Late last year the party returned $253,000 donated by a Thai businesswoman who is a permanent resident because it was not clear she was the source of the money.

Federal election law currently bans political contributions from foreign corporations but allows donations from American subsidiaries. Fowler said the DNC will put in place a more restrictive limit by refusing to take funds from such subsidiaries.

Both parties accept soft-money donations from individuals, corporations, and labor unions. Some of those donations run into the hundreds of thousands of dollars. Fowler said from here on the DNC would limit those donations to $100,000 per year.

DNC officials estimated that if the new restriction had been in place last year, it would have cost the party $6.5 million. The committee at one point in the past had a similar ceiling on such contributions but at a time when donations in excess of $100,000 were far more unusual.

DNC officials also said they would institute more rigorous internal checks on contributions and implement screening procedures to prevent anyone who has made a questionable contribution or of questionable background from attending small fund-raising events with the president or vice president.

The White House was embarrassed earlier by revelations that a Chinese arms merchant and an accused drug dealer attended separate events at the White House organized by the DNC.