Posted at 11:12 p.m. PDT Friday, June 16, 2000


Parties mine valley for soft money
BY MARY ANNE OSTROM
San Jose Mercury News
Silicon Valley Republicans have not been shy about coming up with big bucks for George W. Bush. But now they are entering the high-roller world of political fundraising.

Monday, Republicans will hold their first big ``soft money'' fundraiser in the valley, and they expect to at least match Vice President Al Gore's record-setting haul of more than $2.5 million in April. Soft money refers to unrestricted campaign funds given to national political parties and their campaign committees.

The event, featuring Bush and hosted by Cisco Systems CEO John Chambers at his Los Altos Hills home, also marks the coming-out of Chambers as one of the GOP's top soft-money contributors. He wrote $210,000 in personal checks to GOP campaign committees in one week in March.

As for the Democrats, who have been mining the valley for soft money for years, Gore arrives Friday for another round. Gore supporter Marc Andreessen, chairman of Loudcloud Inc., bested Chambers in March, contributing $250,000 in a single donation to the Democratic National Committee.

Soft money can be given in unlimited amounts by individuals and corporations for issue-based ads and party-building activities.

By comparison, ``hard money'' contributions, which are given directly to candidates, are restricted under federal law to $1,000 per candidate for each election and corporate donations are banned entirely. Corporations can, however, donate up to $15,000 annually to parties or $5,000 per election to candidates through political action committees.

That money, however, is often used in creative ways to promote candidates, coming too close to the legal line, argue campaign-reform advocates who want soft money banned. After years of mostly staying on the sidelines of the soft-money game, several Silicon Valley executives -- and one corporation -- have emerged as top players.

This election cycle, Oracle Corp. has so far contributed $380,000, mostly to Republicans. Nationally, it ranks as the 71st-largest contributor of the unrestricted money, just behind America Online. Microsoft Corp. ranks fifth at $1.2 million, and AT&T is first at $2.2 million.


Contributing as individuals

``All of a sudden, there's a whole range of political issues that have become very important critical bottom-line issues for the company,'' said Ken Glueck, Oracle's vice president for government affairs.

Andreessen, who gave no soft money in the 1997-98 cycle, ranks as the 16th-largest individual contributor of soft money nationwide. Chambers has moved from 112th place to 32nd place, according to a recent analysis by the non-partisan Center for Responsive Politics. Chambers and Andreessen purposefully make their contributions as individuals, saying they don't want it to be considered a corporate activity.

``Usually it's driven by a CEO wanting to be a player and involved in the leadership of their industry, in some cases it's a reaction to regulation and a perceived threat to their industry,'' said the center's research director Sheila Krumholz. ``For some, it's an ego trip. These folks want to be at the head of the table.''

Billed by a Chambers' spokesman as the ``premier Bush fundraiser in the valley so far,'' Monday's stand-up buffet dinner requires a minimum contribution of $25,000 per couple. About two-thirds of the money expected to be raised would be soft money, according to one organizer. Friday, Gore is bringing his ``progress and prosperity'' tour to the Bay Area and will hold a fundraiser for the Democratic National Committee, his second in two months.

If the 1997-98 election cycle was the ``dating period,'' Center for Responsive Politics analyst Holly Bailey wrote in a recent article on Silicon Valley's role in political giving, then the 1999-2000 cycle marks the period that ``political candidates and parties attempted to go steady with, or even marry, the high-tech industry.''

Nobody in the valley disputes that.

``If somebody would have told me five years ago that we would partner with government, I would have said, `Why?' '' Chambers said. ``The answer was, because we both have the same interests, and if you don't, you get into trouble very, very quickly -- on both sides.''

Nonetheless, several major valley corporations and their officers refuse to contribute soft money, including Intel Corp. and Hewlett-Packard, which instead make political action committee contributions -- limited to $5,000 -- directly to candidates. Cisco has no political action committee.

``It's a personal cause with Chambers,'' said Kent Jenkins, Cisco Systems spokesman in Washington, D.C. ``Something gets on his radar screen and he's going to put his money where his mouth is.''


Soft-money impact

The Technology Network, of which Chambers is co-chair, has had a huge impact, educating executives about the importance of being involved and getting access by political giving, said Gary Fazzino, Hewlett-Packard's recently appointed director of government affairs. Many of the valley's biggest soft-money contributors are intimately involved in TechNet, including Kleiner Perkins Caufield & Byers partners John Doerr and Floyd Kvamme, and former Netscape CEO Jim Barksdale.

Last week, voters in many parts of the country (but not in California, because of the expense of television advertising) saw the first significant signs of soft money in the 2000 presidential election. The Democratic Party started running so-called ``issue ads,'' even as they prominently focused on presumptive presidential nominee Gore.

The Republicans responded two days later with ads highlighting Bush's position on Social Security. Both parties are financing the ads with a mixture of hard and soft money.

Critics say these ads make a mockery of the campaign-finance laws. ``Federal campaign-finance laws are almost meaningless,'' said Bob Stern, president of the Center for Governmental Studies, which advocates campaign-finance reforms.

The center reports that soft-money contributions from computer-related firms and individuals are double that of the 1997-1998 cycle, with nine months to go.

Stern attributes the sharp rise to the government's antitrust action against Microsoft.

``The feeling was Silicon Valley didn't have to play by the rules, that `we're different,' but now with Microsoft they see that's no longer true,'' he said.

Andreessen, a longtime supporter of Democratic causes, explained his $307,500 in soft-money contributions in the past year simply as that of an enthusiastic Gore supporter with money. ``In the 1996 cycle, I didn't have any money. In the 1992 cycle, I was in college,'' he said.

But he disputed Stern's Microsoft theory, arguing that if valley leaders had wanted to influence government antitrust actions, ``it should have been giving four, five, six years ago.''


Some don't give

But many valley corporations, sensitive to shareholder, customer and even employee reactions in the wake of national fundraising scandals, have not given soft money.

``I'm not sure it's the right time to make soft-money contributions,'' said Hewlett-Packard's Fazzino. But he admitted that could change.

``There's no question we all benefit from their giving,'' he said. ``We appreciate Chambers and Andreessen for making contributions, but it's not HP's style -- just yet.''

In addition to his soft-money bonanza, Bush is also expecting to raise as much as $300,000 in hard money for his own campaign at a reception beforehand at the Crowne Plaza Cabana in Palo Alto. His only public event is a brief panel discussion focusing on mathematics training at Cupertino's De Anza College on Tuesday morning.

In the past, Kleiner Perkins partner Floyd Kvamme, a major Republican fundraiser, criticized Democrats for their soft-money functions as he watched Clinton and Gore swarm over the valley. He said he believes that Monday's GOP event could set a troubling precedent, even though he says it has become necessary if Republicans are to compete effectively in November.

``If I say Monday's fundraiser is the first step, that means there's a whole flight of stairs,'' said Kvamme, who with his wife gave $75,000 in soft money in 1997-98.

Now that valley leaders are willing to write $250,000 checks, there is no question Democrats and Republicans will be back for more.




Mercury News Staff Writer Lori Aratani contributed to this report.