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Court Declares Part of Campaign Finance Reform Law Unconstitutional

Aired May 2, 2003 - 16:00   ET


ANNOUNCER: Who's been dressing up like the Village People? We'll spell out allegations of bizarre costumes, costly retreats and strip teases at taxpayer expense.

Carolina dreaming. The Democratic presidential candidates are set to hold their first formal debate, but how many voters will watch or care?

Can the president get the economy in ship shape? The new jobless numbers are not helping his mission or his message.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We need a bold economic recovery package so people can find work.

ANNOUNCER: Now, live from Washington, Judy Woodruff's INSIDE POLITICS.


KATE SNOW, GUEST HOST: Hello. I'm Kate Snow sitting in for Judy today.

We begin with a breaking story, a legal ruling that may help determine how the 2004 election is financed and, in turn, could shape the outcome. A federal court here in Washington has declared part of the campaign finance laws ban on so-called soft money unconstitutional. That law, you might remember, took effect last November after its Senate sponsors, John McCain and Russ Feingold, waged a long and sometimes very bitter political battle to get it passed. The ruling is as complicated as that battle was. It is 1,600 pages long. We are sorting through the decision, and will have more on it shortly.

CNN's Tim O'Brien joins us with some initial details about that ruling. Tim, I understand you've been able to get just a little bit of a brief.

TIM O'BRIEN, CNN CORRESPONDENT: Well, it is a sweeping campaign finance reform Bill and a sweeping, sprawling decision, upholding portions and throwing out portions of this law. Among dozens of issues to stand out, one is the ban on unregulated soft money that political parties raise and spend on behalf of political candidates. This law forbids national parties from raising or spending money like that and sharply restricts what state and local parties can do. The court today has found that ban to be a violation of free speech. A violation of the First Amendment.

Another big issue in the case is the law's prohibition of issue advocacy ads within 60 days of an election. Ads that name a candidate and not only address an issue but clearly are designed to help or hinder that candidate. Also challenges a violation of free speech. This part, however, has been upheld by the court on a 2-to-1 vote. The court sharply divided on this issue. The court heard arguments in this case in early December and indicated it would try to have a decision out by the end of January. Well, here it is the beginning of may. That and the 1,600 pages in the opinions underscore how difficult and how complex the court found this case.

The law called the Bipartisan Campaign Finance Reform Act has a provision in it that authorizes direct appeal to the U.S. Supreme Court. And there's very little doubt that the Supreme Court will have the last word on this case, the lawyers making much the same arguments before that court. The justices have already completed hearing argument for the current term, but this case is so important, there's a very real chance they may come back and have a special session, perhaps as early as next month. The next election is only a year and a half away and, Kate, the money game has already begun.

K. SNOW: I know that from my normal post on Capitol Hill. Tim, so just to be very clear, put a fine point on this, it is just part of the bill that was signed into law that is being found unconstitutional?

O'BRIEN: That's right. What many people thought was the most likely to go down, the ban on issue advocacy that apparently has been upheld on a two-to-one vote. But there's no question here that the Supreme Court is going to have the last say. The only issue is when they'll get the case and when they'll get their decision out.

K. SNOW: Tim O'Brien here in Washington. Thanks, Tim.

Now, to the presidential campaign. All nine Democratic candidates are heading to South Carolina for their first formal debate, the earliest ever in a race for the White House. But they'll be hard pressed to get the kind of publicity President Bush got during his tour as a top gun aboard the aircraft carrier "Abraham Lincoln." Today, however, Mr. Bush may feel more grounded by the latest unemployment numbers, which hit a four-month high in April.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Today, we saw some new statistics on employment. The unemployment number is now at 6 percent, which should serve as a clear signal to the United States Congress, we need a bold economic recovery package so people can find work.


K. SNOW: The president talked up his economic plan and took the controls of a simulated tank at a California company that supplies the Pentagon with Bradley fighting vehicles. You can pretty much bank on the Democratic presidential candidates to bring up the sour economy during their debate in Columbia, South Carolina tonight. Why South Carolina? Well, when the state holds its primary on February 3, 2004, it will be the first test of the Democratic candidates' strength in the south, and the first real test of their ability to win African-American votes. South Carolina also may be a make-or-break state for Senator John Edwards, since he, of course, is from neighboring North Carolina.

Still, you may be asking yourself why hold a presidential debate now, after all, it's a full nine months before any primary season votes are cast.

Our Bruce Morton reports on a political process that keeps starting earlier and earlier.


BRUCE MORTON, CNN CORRESPONDENT: Remember these cattle calls, the political pros called them or beauty contests. A bunch of candidates, some arbitrary format, you have 23 seconds to respond and they're supposed to help you pick a presidential candidate. And the first 2004 one is this weekend. Already? So early?

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: It's so early because the calendar is moving up. It's probably even getting earlier because you have this political campaign industry and people have to do something to earn a living.

MORTON: One reason it's so early is the field is so big. Nine wannabes, enough for a baseball team. You know them all, of course, Carol Braun, used to be a senator. Howard Dean, an ex-governor. John Edwards, North Carolina. Dick Gephardt, Missouri congressman, Bob Graham, Florida senator, John Kerry from Massachusetts. Dennis Kucinich, Cleveland congressman, Joe Lieberman, the running mate last time. Al Sharpton, hard to break out of a big field.

DAN BALT, "WASHINGTON POST": These candidates have a lot of ground to cover between now and the end of this year, not only in fundraising, but really getting known.

MORTON: Real people don't care, just 4 percent told a recent CNN/USA Today Gallup poll they're playing close attention.

ROTHENBERG: The operatives, the Democratic Party insiders, they know that's something's going on. They're the ones who are really beginning to try to say, OK, which of these candidates do I think looks like a president, which of these candidates do I think can really take on George W. Bush.

MORTON: And it's early because the whole thing is early. Iowa's caucuses probably January 19, New Hampshire primary the 27th, a slew of primaries February 3.

UNIDENTIFIED MALE: The Democratic presidential nomination is probably going to be decided by mid-February. So when the result comes earlier, the campaigning has to start earlier. Everybody is engaged now.

MORTON; Here they come, ready or not. You're not, are you?

Bruce Morton, CNN, Washington.


K. SNOW: Lee Bandy of South Carolina's "The State" newspaper is a long-time observer of Palmetto state politics. He joins me in just a few minutes to discuss what's at stake in tomorrow's debate. More on tomorrow's debate also in our "Campaign News Daily." Howard Dean is on the receiving end of the latest back and forth between his aides and those of Senator John Kerry. Referring to Dean, a Kerry strategist told the "Wall Street Journal," quote, "angry candidates don't wear well." A Dean adviser responded by labeling Kerry soporific.

The Kerry campaign has filed an amended financial report with the IRS covering almost $300,000 in donations for his political action committee. Kerry tells the "Boston Herald" that a staff error caused the contributions to go unreported. In a published report yesterday, Kerry was confronted with evidence his first Senate speech was not about abortion rights as he has claimed. Kerry said he may have been misled by a staffer.

Senator John Edwards is dispatching two people who know him better than anyone to campaign in Iowa, his parents. Wallace and Bobby Edwards are scheduled to appear next week at the Iowa State Association of Letter Carriers convention in Davenport, Iowa. Before her retirement, Bobbi Wallace once worked as a rural letter carrier.

Still ahead, a preview of the Democrats' clash in South Carolina.

And move over Tom Cruise, the president's shipboard performance is getting rave reviews. But will it help him reach the ultimate political reward?


K. SNOW: As we reported at the top of this program, a federal court in Washington today struck down a part of the ban on soft money that was in the campaign finance reform legislation. Big news on Capitol Hill.

My colleague Jonathan Karl joins us now with some reaction from there -- Jon.

JONATHAN KARL, CNN CORRESPONDENT: Well, Kate, I'm joined by a senator, Republican who worked very hard to defeat the campaign finance reform bill in the Senate. He was unsuccessful there, but I imagine, Senator Larry Craig of Idaho that you welcome this decision knocking down the ban on soft money.

SEN. LARRY CRAIG (R), IDAHO: Well, I welcome openness in government instead of government stepping in and telling the individual citizen how they can or cannot participate in the political process. The courts have been very clear in that money and politics is free speech. And it ought not be limited. It can be shaped, it must be reported I believe. I think the public has a right to know who is involved. But I don't think we ought to limit the involvement.

KARL: If the Supreme Court upholds holds knocking down this ban on soft money, what is the immediate impact on the political parties, Republican and Democratic parties?

CRAIG: Probably doesn't change them too much because soft money has been a part of politics for some time. The coming election, if this were to hold, would be the first election without it. You might see some adjustment in fundraising, but then again, let's talk about openness, reporting, full disclosure, not limiting and controlling.

KARL: So, you're happy with this decision?

CRAIG: I am.

KARL: Senator Larry Craig, thank you very much.

CRAIG: Thank you.

KARL: All right, Kate, not surprising here, Republicans, you can imagine, by and large will be welcoming this decision, except for those like John McCain that worked very hard to get campaign finance reform passed. But, of course, the big battle still to come in the Supreme Court.

K. SNOW: And, Jon, I imagine we are going to have a lot of aides working all weekend long reading those more than thousand pages of that decision today. Thanks, Jon Karl.

KARL: Absolutely.

K. SNOW: Coming up a controversy involving the post office and the Village People. Sounds crazy. Story when we come back.

Plus, all political eyes will be on South Carolina this weekend. Eight men and one woman who want to be the next president clash in Columbia. We'll go live to the Palmetto State.


K. SNOW: Now back to Capitol Hill and some startling allegations. Two Democratic senators are calling for the postal service board of governors to fire its inspector general. They accuse her of wasting public money on a series of staff retreats where some rather bizarre things went on.

Here again, our congressional correspondent Jonathan Karl -- Jon.

KARL: All right, Kate, I'm having some audio problems, sorry about that. This is an interesting case. It's not just two Democratic senators, by the way, that are upset about this. It's also the Republican chairman of the Finance Committee, Chuck Grassley, who for several months has been investigating this inspector general at the U.S. Postal Service. It all comes down to what she says is simply a management technique, and what they say is a waste of taxpayer funds.


KARL (voice-over): This mock strip tease is said to be part of a department bonding session conducted by the U.S. Postal Service's inspector general. According to current and former employees, it's part of the unusual management style of Carla Corcoran, the postal services internal watchdog charged with rooting out waste, fraud and abuse.


KARL: Tapes shot by current and former employees of Corcoran and obtained by CNN from a former employee show team-building retreats where Corcoran allegedly requires some of her 750 employees to do things like dress up as cats, sing songs like the Village People.




KARL: And work on group activities like building gingerbread houses. Corcoran now finds herself under fire from lawmakers, including Senators Byron Dorgan and Ron Widen, who say she has wasted millions of dollars on employee retreats. They want her fired. In a written statement, Corcoran stood by her actions. "I have no plans to resign," she said. "And I stand by the performance of my agency which has identified more than $2.2 billion in savings and cost avoidances to the U.S. Postal Service and ratepayers over the last six years.


KARL: Now, Corcoran's statement also says that this kind of management technique or team building exercises are common throughout corporate America, even if they are unusual in the government. As a matter of fact, the consulting firm that helped her put this together, according to her office, also works for such clients as American express, AT&T, Coca-Cola and many other major Fortune 500 companies. Now, as for Carla Corcoran, herself, she is a Clinton appointee. She was appointed back in 1997. Her term expires at the end of this year. She would need to be reappointed in January 2004. And as you see from her statement, she has absolutely no intention of resigning before the end of her term, Kate.

K. SNOW: Jon, I was just going to ask you, was she a Clinton appointee or a Bush appointee. You answered that. Thanks a lot. Jon Karl back on Capitol Hill.

As you may have seen here on CNN, it has been another day of military homecomings. CNN's Kyra Phillips is standing by with more from Oceana Naval Air Station in Virginia Beach, Virginia where a squadron of fighter planes returned home just a short time ago. Kyra, I imagine a lot of smiling faces out there where you are?

KYRA PHILLIPS, CNN CORRESPONDENT: Yes, you can tell the families are really excited. Here we go, Kate. I think we're going to be able to link up the Snow family, Fawn with her husband Scott Snow. We're looking at the jet right now, jet 100. She's waving. Is he coming this way? Let's go, let's head over there. Come on. Let's go. We can head that way. She's got the whole family here.

Now, Scott Snow is the pilot, Kate, that I had a chance to fly with over in the Persian Gulf off the USS Abraham Lincoln. There, she's waving for him. He's right over here. And now and then -- here they come. All right. They're going to make a mad dash. Here we go. Scott! Here we go. This is the Snow family coming together. He had not seen his son in months. She was pregnant before -- when he had to go to war, and now he's finally seeing her and the baby for the first time in months. Lieutenant Commander Scott Snow and Fawn Snow and little baby Logan.

LT. COMMANDER SCOTT SNOW: Hey, honey. How are you, pooker?

PHILLIPS: Fawn, are you one happy woman?

FAWN SNOW, SCOTT'S WIFE: I am beyond happy. This is the most beautiful thing to see your son and your husband safe together.

PHILLIPS: How does he look, Scott?

S. SNOW: He looks great.

PHILLIPS: You weren't supposed to cry.

S. SNOW: I know, tough guy image blown.

PHILLIPS: How was the flight back?

S. SNOW: It was good. It worked out really well.

PHILLIPS: All right, well, your whole family is here. We want you to get a chance to say hi to everybody, OK?

Kate, this is a very special time for the F-14 Tomcatters, not only because they are home to see their families but these were the first guys to launch off the deck of the "USS Abraham Lincoln" when president Clinton said that no longer are they operating Operation Southern Watch but Operation Iraqi Freedom." So these are the guys that had that first taste of war when it happened and now, finally, they are home after ten months of being at sea -- Kate.

K. SNOW: Kyra, an amazing story. Nice reunion. No relation to me, but thanks so much. Beautiful baby there too. Appreciate the live report, Kyra Phillips down in Virginia with the returning Tomcatters.

Coming up, a new chapter in the controversy over comments made by Senator Rick Santorum. INSIDE POLITICS is back in just a moment.


K. SNOW: Members of the group Parents and Friends of Lesbians and Gays tell CNN they're glad that Senator Rick Santorum -- quote -- "came out of the closet" to speak to them last night. But they say they left the heated half-hour meeting on Capitol Hill rather disappointed. They say Santorum would not budge from defending his recent comments comparing homosexuality to incest, bigamy and adultery.

As we reported, South Carolina Democrats are hosting a big weekend of events highlighted by tomorrow night's debate featuring the nine candidates for the party's presidential nomination.

With me now to talk more about the candidates, the debate and South Carolina's role in next year's primaries is Lee Bandy. He covers politics for "The State" newspaper down in Columbia, South Carolina. Mr. Bandy, thanks for being with us.

LEE BANDY, "THE STATE": It's a pleasure, Kate.

K. SNOW: How important is this debate? It's really early. Are people really focused on this in South Carolina?

BANDY: No, they really are not. And as you said, this debate is way too early, and I don't know who is going to watch it, because it will not be shown live. It's going to be a tape delay shown at 11:30. About the only people that are going to be watching that are junkies like me and other reporters. And people like you, Kate.

K. SNOW: And maybe some of us up here in Washington, yes, you're right. Let's take a look at the latest poll that we have in South Carolina, recent poll showing Joe Lieberman at the top of the pack. Again, it's really early, but they're showing that he's got 19 percent, Gephardt 9 percent, Kerry, 8 percent and Edwards up there in the top four with 7 percent. Is that because of name recognition do you think from 2000 with Lieberman?

BANDY: That is mostly a function of name I.D. And that same poll you cited shows that 47 percent of South Carolinians are undecided. But this race is wide open.

K. SNOW: Is John Edwards the favorite son down there? Do you think he'll able to gain strength just from being a southerner?

BANDY: It will help. He's a native of South Carolina and, of course, a senator from the neighboring state of North Carolina. Right now, he seems to be having a difficult time getting any traction. But again, it's early, and he will be in the top two, in my opinion.

K. SNOW: He made some comments that got some attention the other day, referring to Strom Thurmond and Trent Lott as the Old South. He said that's the past. I'm the New South. How is that playing down here? Help him? Hurt him?

BANDY: I think that helps Edwards in the black community, and it certainly doesn't hurt him outside of South Carolina. So he is not hurt by that at all.

K. SNOW: And, just finally, what do you think they need to say tomorrow night, I mean, to really grab attention? What are you looking to hear?

BANDY: I'm not looking to hear a heck of a whole lot to tell you the truth, because again, this is an early primary, and the issues that he'll discuss today could change next year. And so they're going to be very cautious in how they respond to those issues. I think that the South Carolina people who will see these people for the first time will be watching and so first impressions will mean a lot. Who stands out among the pack?

K. SNOW: Lee bandy with "The State" newspaper down in South Carolina, in Columbia. Thanks so much for your time. Appreciate it.

BANDY: Thank you, Kate.

K. SNOW: Still ahead a commanding picture, but were the words really what counted? We'll read between the lines next.


K. SNOW: Back now to our lead story for just a moment. Campaign finance reform bill that was much trumpeted, most of that bill's ban, that law's ban on soft money has now been struck down as unconstitutional by a federal court on Friday. Some reaction now from Capitol Hill from Bob Nay, a representative from Ohio, a leading opponent of campaign finance reform. He called it a great victory for free speech. This decision knocking down some provisions in the bill. He said, "No one can guess, but a 2-to-1 victory is a good sign itself that this may go on to the Supreme Court. He said I hope it goes all the way through to the Supreme Court.

Helping to fly a Navy jet may be thrilling, but staying on message may really be crucial to keeping the president's political future on course. Let's check in with our senior political analyst, Bill Schneider. Hi, Bill.


You know, it's being called the mother of all photo ops, but it was also a carefully crafted message to set the agenda for 2004 and the political "Play of the Week."


SCHNEIDER (voice-over): In February, 1991, after the first Gulf War, the first President Bush went on television to declare ...


SCHNEIDER: This week, the second President Bush went on television to declare ...

G. W. BUSH: The war on terror is not over.

SCHNEIDER: The first Gulf War ended with big parades under a yellow ribbon in Washington, D.C. with a ticker tape in New York City. This campaign ended with the president declaring ...

G. W. BUSH: Our mission continues.

SCHNEIDER: In 1992, the Gulf War disappeared from the political agenda. No one ever said the campaign was about the war, stupid.

BILL CLINTON (D), PRESIDENTIAL CANDIDATE: But this election ought to be about the American people.

SCHNEIDER: This White House is determined not to let the war slip off the campaign agenda. President Bush didn't call it the war in Iraq. He called it ...

G. W. BUSH: In the Battle of Iraq, the United States and our allies have prevailed.

SCHNEIDER: Did President Bush even use the word victory? Yes, but not a final victory.

G. W. BUSH: The Battle of Iraq is one victory in a war on terror that began on September the 11, 2001, and still goes on.

SCHNEIDER: The president went further than he ever has in linking the war in Iraq to 9/11.

G. W. BUSH: We've removed an ally of al Qaeda. And cut off a source of terrorist funding.

SCHNEIDER: Remember what President Bush said shortly after September 11, 2001, about the war on terror?

G. W. BUSH: It is a war that is going to take a while. It is a war that will have many fronts.

SCHNEIDER: It is a war that will stay on the agenda right through 2004, unlike the first Gulf war. This President Bush intends to run for reelection as the commander in chief. He opened the 2004 campaign this week on the deck of the Abraham Lincoln with the political "Play of the Week."


SCHNEIDER: The president never once uttered the name Saddam Hussein in his speech last night. Well, we don't know what happened to him. Most Americans think he's still alive, just like the other name that never gets mentioned anymore, Osama bin Laden -- Kate.

K. SNOW: Bill Schneider, thanks.

That's it for INSIDE POLITICS. I'm Kate Snow.



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