From the New York Times

Divided Court Says Government Can Ban 'Soft Money'
By DAVID STOUT
Published: December 10, 2003
WASHINGTON, Dec. 10 — The Supreme Court handed down today the most important ruling in a generation on the place of money in politics, upholding a law that bars national parties from raising huge amounts of unregulated "soft money" that many people say has corrupted the American political process.
A 5-to-4 majority upheld most provisions of the McCain-Feingold Law, finding that the law's ban on soft-money donations was not an unconstitutional curb on free speech, as its opponents have argued, but rather a legitimate response to perceptions that big money has stained the political system.
The court also upheld two other pillars of the law: a ban on the solicitation of soft money by federal candidates, and a prohibition against political advertisements by special interest groups in the weeks just before an election.
"The idea that large contributions to a national party can corrupt or create the appearance of corruption of federal candidates and officeholders is neither novel nor implausible," the court said in a summary of its 298-page decision as it alluded to debates about the potent mix of money and politics over the years.
Today's decision means that the candidates for president, the House and Senate can run their campaigns under the fund-raising rules laid down in 2002, when Congress passed the McCain-Feingold Law after years of bitter argument over how political contributions should be regulated. (The law, formally the Bipartisan Campaign Reform Act of 2002, is usually known by its chief Senate sponsors, John McCain, Republican of Arizona, and Russell D. Feingold, Democrat of Wisconsin.)
"We are under no illusion," Justices John Paul Stevens and Sandra Day O'Connor wrote for the majority. "Money, like water, will always find an outlet. What problems will arise, and how Congress will respond, are concerns for another day."
But for the moment, the ruling elated Senators McCain and Feingold and the law's House sponsors, Representatives Martin Meehan, Democrat of Massachusetts, and Christopher Shays, Republican of Connecticut. "This opinion represents a landmark victory for the American people in the effort to reform their political system," the four said in a joint statement. "We must make sure that the law is properly interpreted and enforced."
Although the ruling applies to candidates for federal office, it is likely to reverberate at the state and local level as well. In recent years, a number of municipalities have enacted curbs on raising and spending money for political campaigns.
Justices David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer joined Justices Stevens and O'Connor in the main opinion. Chief Justice William H. Rehnquist and Justices Antonin Scalia, Anthony M. Kennedy and Clarence Thomas dissented on most points.
"No doubt Congress was convinced by the many abuses of the current system that something in this area must be done," Chief Justice Rehnquist wrote. "Its response, however, was too blunt."
Justice Scalia said the majority ruling marked "a sad day for the freedom of speech." He went on to assert, "We have witnessed merely the second scene of Act I of what promises to be a lengthy tragedy."
Representative Mike Pence, Republican of Indiana, agreed with the dissenters. "This is a dark day in the history of liberty and the Supreme Court," he told The Associated Press.
The White House had a tepid reaction. President Bush signed the law "because he believes that, over all, it helped improve the system," Scott McClellan, the president's chief spokesman, said today. Mr. McClellan said the ruling "will help bring some clarity to the process."
As the differing comments suggested, the issues are hardly as cut and dried as some advocates on either side have contended. In its summary, the court said that the government's interest in curbing political contributions "is not limited to the elimination of quid pro quo, cash-for-votes exchanges." Rather, the court said, it extends also to "undue influence on an officeholder's judgment, and the appearance of such influence."
On a more practical level, candidates need money — astronomical sums to run for president, millions to run for the Senate or House. Where they get the money — and what the donors expect in return — are concerns that have been debated for years.
Today's ruling was the latest chapter, but probably not the last, in a drama that has been playing out since the Watergate era. Back then, revelations of unsavory contributions of huge amounts of money caused such revulsion that Congress enacted laws meant to curb the worst abuses.
But in 1976, the Supreme Court ruled that, while limits on contributions were legal, limits on spending were not. That ruling inspired politicians, their fund-raisers and lawyers to find creative new ways to raise money outside the limits. Generally known as "soft money," these contributions from corporations, labor unions and other powerful interests were ostensibly for party activities and other civic-minded endeavors, although they often benefited particular candidates.
Among other provisions in exchange for the soft money ban, the McCain-Feingold Law raised the limits on the more strictly regulated contributions known as "hard money." The limits on how much an individual can give to a federal candidate rose to $2,000 an election, from $1,000, with subsequent increases allowed for inflation.
But the influence of soft money is what inspired the McCain-Feingold Law. And the belief that the law is wrong caused Senator Mitch McConnell, Republican of Kentucky, and others to sue. Hence, the case's title: McConnell vs. Federal Election Commission.
On Sept. 8, the Supreme Court justices returned early from their summer vacation to hear an extraordinary four hours of arguments, versus the one hour allotted to most cases. An appeals court had handed down a splintered decision in May, striking down part of the McCain-Feingold Law.
Today's ruling is certain to be studied closely by political strategists. As the court acknowledged in its summary, "The history of campaign finance regulation proves that political parties are extraordinarily flexible in adapting to new restrictions on their fund-raising abilities."