SenatorJohn Mccain Discusses the Status of the McCain-Feingold Campaign Finance Reform Law

Senator McCain, so how bad is it?

Senator JOHN McCAIN (Republican, Arizona): Oh, it's fine. It's fine. Look, Judge Leon, the swing judge between the two, said the latest chapter in the history of long-standing and recurring problem that our government has been wrestling with since the administration of Theodore Roosevelt, and this is the swing judge. He said he found--'I find that the defendants have more than adequately demonstrated the constitutionally necessary basis for Congress to restrict the use of soft money donations, to restrict the airing of corporate and union elector chair--electioneering communications which promote, oppose, attack or sus--port se--specific candidates.

Where we lost was the removal of the so-called soft money ban, but the money--the--according to this ruling, that money cannot be used for broadcast purposes.

BORGER: Well, let's tell our viewers what we're...

Sen. McCAIN: It can be used for--it can be used for get out the vote, voter registration, etc., but it cannot be used for broadcast, which is what 95 percent of the soft money has been used for in campaigns.

BORGER: Well, let's tell viewers what we're talking about when we say soft money, money from fat cat...

Sen. McCAIN: Yeah.

BORGER: ...from big corporations.

Sen. McCAIN: It's unlimited donations. In other words, right now the law--McCain-Feingold says individuals are restricted at $2,000 in the primary and $2,000 in the general. These are--these are large donations of huge amounts of money.

BORGER: But if state parties can now use that money, isn't there some way it's going to trickle down to the candidate? If the national parties--if the state parties can raise that money, won't it make its way back to the candidates in some way, shape or form?

Sen. McCAIN: Well, I think--I think they'll try to. I think that vigorous enforcement of law will prohibit it from being used for broadcast reasons. But if there's a provision that I believe will stand--withstand the Unite--in the United States Supreme Court, it will be that ban on soft money.

Frankly, I was astonished--or let me say surprised--that they upheld the ban on outside advertising from any organization that mentions a candidate's name or face. And that was much stricter than the so-called Snowe-Jeffords provision, which required it to be 30 days before a primary and 60 days before a general to be prohibited.

MURRAY: Well, let's talk about that a little bit, because we happen to have a new ad that's being run against Senator Voinovich in Ohio by the Club For Growth. I--I--I want you to listen to it, and then let's talk about whether it fits inside the law as it's been interpreted by the court. Here's the ad.

Unidentified Man: (From political advertisement) President Kennedy cut income taxes, and the economy soared. President Reagan cut taxes more, and created 15 million new jobs. President Bush knows tax cuts create jobs, and that helps balance the budget. But Senator George Voinovich opposes the president. Ohio has lost thousands of jobs, and President Bush has a plan to help. Tell George Voinovich to support the Kennedy-Reagan-Bush tax policy that will bring jobs back to Ohio.

MURRAY: What do you think of that ad? Does it fit the law as you understand it?

Sen. McCAIN: I think it fits the--the--this lower court's ruling that you can't run a name or mention--or a face of a--of a federal officeholder or candidate, so...

MURRAY: You think it's an illegal advertisement.

Sen. McCAIN: I--my reading of the--of the--of the court decision, it is. I would be more than happy to consult more with lawyers, but it seems to me they're pretty specific.

As far as this fund-raiser that Gloria mentioned coming in there, that's a hard-money fund-raiser the Democrats are holding. But if I were a donor and I was asked for soft money by an officeholder, I would be very careful because I think they can be in violation of law, because the--the court did uphold the so-called coordination provision which prohibits an officeholder from soliciting money, soft money.

BORGER: So--and so as a--as a candidate you can say to somebody, 'Give me hard money.'

Sen. McCAIN: Yes.

BORGER: 'You raised that from $1,000 to $2,000.'

Sen. McCAIN: Yeah.

BORGER: Somebody can write a $2,000 check. That's perfectly fine. But these new committees that they're talking about forming that get the imprimatur of congressional leaders but actually raise soft money--you are now saying that's dirty business.

Sen. McCAIN: Yeah. And again, donors are--are going to be held responsible as well as those who solicit.

MURRAY: But--but aren't we getting a little too hung up in this--in this definition between hard money and soft money? I mean, the truth of the matter is you got George Bush out there talking about raising $200 million, you got all these Democrats out there raising money. They're still spending all their time right now--or most of it--raising money. They're still raising gobs of money. What have we done?

Sen. McCAIN: Well, you've hurt them a lot. That's why they've opposed the--otherwise, they'd have been happy with the legislation. They screamed like stuffed pigs. They--they--you know, they--they're--they're challenging and asking for a stay and appealing, so it must be harmful to them.

Look, the fact is up until this law was passed, at fund-raisers, people, corporations and unions, were writing checks for $500,000, $1 million. They can't do that anymore. Ask any of the chairmen of these committees. They feel severely restricted.

MURRAY: All right. Senator, don't go away.

Sen. McCAIN: OK.

MURRAY: We want to talk to you some more about the tax cut moving through the Senate, when we come back on CAPITAL REPORT.

BORGER: And was it wrong for President Bi--Bush to spend almost a million dollars to make a dramatic declaration of victory aboard an aircraft carrier? The criticism and the controversy later in our HOTtype report.

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MURRAY: We're back on CAPITAL REPORT with Senator John McCain.

Senator, thanks for being with us and staying with us.

You, I'm sure, have seen that tax bill that the Senate Finance Committee is working with. What do you think of it?

Sen. McCAIN: Well, I--I--I think we can't find out the cost of the war and reconstruction, at least according to Secretary Rumsfeld. He said, 'We'll be finished when we're finished.' And I don't believe we should cut taxes until we find out the cost of war and reconstruction. I think we need to spend more money on defense, and I'm very worried about deficits and its impact on interest rates and middle-income and retired Americans.

BORGER: So the way it stands right now, Senator, I take it you are not going to vote for any tax cut.

Sen. McCAIN: Not until we have a handle on the cost of the war and reconstruction. I think we can find that out probably by this fall sometime. But I--c--so far--again, they asked Secretary Rumsfeld, said, 'How long are we going to be there?' And he said, 'As long as we need to be.' I don't think that's a good estimate of the cost.

MURRAY: The White House has been putting a lot of pressure on your fellow senators to try and round up the vote that it needs. Do you think it's having any success?

Sen. McCAIN: I don't know, Alan, because they haven't been consulting me on their strategy.

MURRAY: They haven't been pressuring you?

Sen. McCAIN: No.

BORGER: Senator, what--what would you do, though? You know, the president says that his tax cut would create a million jobs. The Democrats in--in Congress have even come up with a much smaller version. What would you do to--to get the economy moving then?

Sen. McCAIN: Well, look, once I find out the cost of war and reconstruction and also how c--big the deficits are, that's got to have some impact on what we do. But it's--it's--it's working Americans that have been keeping the economy afloat--buying cars, buying houses, etc. It is of some interest that Alan Greenspan, Paul Volcker and Warren Buffett all say that the dividends issue would not have a short-term stimulus effect on the economy. I think most of us feel that a short-term, immediate shot to the system is probably what's called for here, and I think there's plenty of ways to do that.

MURRAY: Senator, on another subject, my favorite newspaper, The Wall Street Journal, had a story this morning saying that Dick Grasso, the head of the New York Stock Exchange, earned $10 million last year, even though it was a pretty bad year for the exchange. You've been quite outspoken on this question of executive compensation. Are you making any progress?

Sen. McCAIN: Well, we're going to have a hearing on it, and we've invited a lot of CEOs. So far we haven't had a single acceptance to talk about it.

MURRAY: Well, why do you think they don't want to go?

BORGER: Tell us who you invited. Senator, tell us who you invited. Name some names and we'll see if they come out.

Sen. McCAIN: I--I---Well, we invited--we invited Mr. Welch, we invited Mr. Ellison of Oracle, we invited a whole long list of names. I'll be glad to provide you with them.

I--I don't know. You'd have to ask them why they didn't come. But it--it--when times are good and corporations are doing well, I think we understand why generous compensation packages would be in order. When companies are in the tank--Mr. Ellison of Oracle cashed in $704 million in stock options in one year, and his stock went from in the 40s down into the teens. No one gets that. So--and there's ample statistics that show that corporate compensation as compared with corp--with employee compensation--the gap is dramatically widening over the years. So it's going to give capitalism a bad name.

MURRAY: What can Congress or the government do about it?

Sen. McCAIN: Not much, to be honest with you, Alan, except shame them. But I'll tell you what, with corporate corruption going on like it is in these kinds of compensation packages, we're not going to see a return of investor confidence.

MURRAY: All right. Senator McCain, thanks for joining us on CAPITAL REPORT.

Sen. McCAIN: Thank you.

BORGER: Thanks, Senator.

Sen. McCAIN: Thank you.