THE MONEY MESS

By MICHAEL DUFFY; NANCY GIBBS

Like many powerful men who were born poor, Bill Clinton is obsessed with money. The obsession is not about the things it can buy; back when he was a civilian, he bought his suits off the rack at Dillard's in Little Rock, ate cheap, rarely took a vacation. Instead, the obsession is about the things money can do: open doors, grease wheels, make friends, cushion blows...and win elections.

Clinton has spent his whole life trying to win elections, but his last may have come at a higher price than even he intended to pay. The way he has run this time could do as much to shape his second term as anything he actually promised to do. After all the speeches and all the spin, the one sure mandate of the 1996 election is for both parties to fix the money system before we have to trust in it again.

In the realm of honest graft, Clinton didn't do anything Bob Dole didn't do; he and his party just did it with the seal of the White House behind them. What does a $25,000 contribution to the Democratic National Committee mean? It will get an event with Al Gore at the vice-presidential mansion. Twice that amount gets a party of 10 people into the White House to see the President. And $100,000? That's a small dinner with the President at the Hay Adams Hotel just across from 1600 Pennsylvania Avenue.

By Election Day the Democrats will have spent an estimated $250 million, the Republicans $400 million in the most expensive presidential campaign in history, a race fully twice as expensive, if only half as suspenseful, as the last one. There seemed to be no rules, no limits, no penalties: no handshake or photograph that was not auctioned off to a lobbyist or a casino owner. One day last week, two Democratic lobbyists ran into each other near the FBI Building. One, who works for a major oil corporation, said in exasperation, "We've given $100,000 a year to the Democratic Party for a long time. We used to be a big player. But now we don't exist."

The selling of favors has become so blatant by candidates at all levels and in both parties that the latest pay-to-play scandal looked for a while as if it would just go away, especially if the White House continued to ignore it energetically enough. But last week even the cynics had trouble keeping up. White House logs showed that former Democratic fund raiser John Huang visited dozens of times in the past year, a level of access Warren Christopher might envy. And Huang wasn't just taking the tour. He dropped in on the President and the man who worries most about the President's re-election, deputy chief of staff Harold Ickes.

Another former fund raiser, Mark Middleton, known in the West Wing as the "Aryan Rotarian" for his blond toupee and his mercantile moxie, liked to remind people that he worked for the chief of staff, even after he didn't. He allegedly continued to pass out his White House calling cards after he had gone into the private sector. The phone number on the card forwarded callers to Middleton's company. "When I read that," whistled a former senior Clinton official, "I thought, 'Oh...my...goodness.'"

It was a measure of the confusion at the normally damage control-obsessed White House that no one was quickly deputized to swat back the charges; all questions were referred to the Democratic National Committee, whose besieged spokeswoman, Amy Weiss Tobe, was already sleep-deprived with a nine-week-old son. As a next step White House officials justified Huang's visits as courtesy calls, political receptions and "outreach" efforts, and revealed that there were two John Huangs: the one who was doing Internet hookups and the other, who was suspended as a vice chairman of the D.N.C.'s financial committee two weeks ago after it was disclosed that he had solicited an illegal $250,000 from a South Korean firm and a questionable $425,000 from an Indonesian couple.

By Friday, Democrats were the ones privately likening the mess to Watergate, and Republicans were publicly bragging that even Janet Reno's Justice Department could not ignore the problem. Reno took the initial steps to determine whether there were grounds to name an independent counsel to investigate the D.N.C. fund raising. In fact she had no choice: under law, once G.O.P. lawmakers had approached her with their complaints, she had to send the matter to the Office of Public Integrity for a 30-day review. After four investigations of various scandals, even the White House has come to see an advantage in this approach; they can put off addressing the issue day in and day out with a hygienic disclaimer: "It's in the hands of the special counsel."

And so what should have been a last, sweet lap to victory across 17 states in six days first required an attempt at respectability. "We have, clearly, one more big job to do," said the President as he campaigned Friday in Santa Barbara, California. "Everybody knows the problems of campaign money today: there's too much of it, it takes too much time to raise, and it raises too many questions." A President who helped his party raise an astonishing $250 million from entities ranging from American Ambulance & Oxygen to the U.S. Tobacco Co. proposed eliminating "soft money" contributions--the unlimited donations to the national and state parties that pay for everything from negative ads to get-out-the-vote drives. He reiterated his support for the only piece of legislation around, the McCain-Feingold bill, that would ban soft money, as well as set voluntary spending limits for House and Senate races, grant free TV time to candidates who accept those limits, ban or severely limit pac money. And Clinton now wants to ban contributions from non-U.S. citizens.

Dole, once known around Capitol Hill for wearing his price tags on his sleeve, was content to call for a bipartisan commission to take the issue "out of politics." But both candidates have little standing on the issue: Clinton did propose a bill in 1994, but he never pressed for it. So it fell to Ross Perot to lend credibility to the cause last week, and his poll numbers quickly began rising into double digits across several closely fought states. "If I am your President," he said, "we will put a sign all across Washington--NOT FOR SALE AT ANY PRICE."

The Clinton White House is on the block to a degree that leaves even Republican influence peddlers breathless. Citing conversations with their own donors, Republican fund raisers charge that in the Clinton White House, no one gets a meeting, a meal, a seat on a presidential commission, an overnight stay or a ride on Air Force One unless he or she has made a donation. Several of the President's key advisers say privately that when they would try to get a group of business executives in to see the President on an important issue, Clinton's political operatives would always demand to know which visitors were financial supporters of the party. And the Huang operation exposed a new twist: a conduit for large sums of foreign money. That raised questions about whether trade and foreign policy might also be for rent, if not for sale. One can almost hear Pat Buchanan roar, "Those foreigners are paying so the White House will keep selling out average Americans and ship their jobs overseas!"

For the Clintons, the crusading children of the Watergate era, the prospect of a postelection hangover had ironic echoes of 1972, when a confident Richard Nixon cruised to re-election over a hapless challenger only to watch a political scandal destroy his presidency two years later. And as with Nixon, the question is why? Why did Clinton need so much money when the election seemed in the bag? The internal goal for the two-year cycle, says a top Democratic Party official, was $250 million--more than twice the amount raised in 1992.

Clinton might say he had no choice. The cash machine exposed over the past few weeks was built two years ago, when his re-election was anything but certain. Last year he told his strategists that unless he spent $10 million in 1995 on television ads to reinvent himself, he wouldn't be in a strong enough position this year to win. Between January 1995 and the convention in August, the President spent nearly $36 million on ads, nearly all of which attacked Dole, Newt Gingrich and the Republican Party, driving up their negatives and painting them as heartless foes of Medicare and education and the environment. It was a big down payment; by January of this year, Clinton was ahead to stay.

The second reason was technique: Clinton was intent on running a seamless, take-no-prisoners campaign, the kind envious Democrats once criticized Republicans for running. His party's research effort on Dole was devastating and lightning fast. They polled every day. Clinton's and Gore's events were flawless and well advanced; the train and bus trips looked--and cost--like a Hollywood big-budget movie. By all accounts, Clinton will have spent all he raised by the time he is done. "It has been a gold-plated campaign," said a veteran Democrat.

And then there was the man at the center, who has been tormented by political money since his first defeat in the 1980 Governor's race in Arkansas. Even when he was safely ahead, he would panic at the very end of his gubernatorial races, to the point of taking out personal loans from the likes of the Perry County Bank and ordering his chief fixer, Bruce Lindsey, to hand out tens of thousands of dollars in cash payments to encourage voter turnout in the Arkansas Delta. The last-minute push continues to this day: Washington lobbyists complain that Democratic fund raisers were resorting to daily cold calls to donors through last week, even telephoning corporate check writers at home. It seemed to be working: in the first 16 days of October, the D.N.C. brought in $10.5 million, nearly half of that in large, soft-money contributions.

Whether anyone broke the law is not clear; but it almost doesn't matter in Washington, where the most outrageous acts are often the ones permitted by law. And so the momentum grows to rewrite the very rules that were born out of the last campaign-finance scandal, 24 years ago. Senators John McCain and Russell Feingold announced last week they planned to reintroduce their bill in the next Congress. But even if it does pass, the law may not be able to close one of the biggest loopholes in the system--the one reinforced last June by the Supreme Court that allows the "independent" allies of campaigns to spend almost without limit, on free-speech grounds. Retiring New Jersey Senator Bill Bradley argues that nothing short of a constitutional amendment capping spending as well as contributions can repair a political system nearly everyone deplores. This week even the politicians joined in the condemnation. But they have ignored voters before, without paying a price. They ignore it at their peril now.

--Reported by Jeffrey H. Birnbaum, Dan Goodgame and Mark Thompson/Washington

With reporting by JEFFREY H. BIRNBAUM, DAN GOODGAME AND MARK THOMPSON/WASHINGTON