WASHINGTON - The legal showdown over the funding of national political campaigns began in earnest Wednesday in the most majestic courtroom in U.S. District Court, with some of the most distinguished lawyers in the national sparring over the implications and the esoteric technicalities of the new law that shapes the nation's electoral process.

In the vast, ceremonial courtroom of the courthouse that lies at the foot of Capitol Hill, a three-judge panel listened as attorneys for more than 80 activist groups, representatives of both political parties, and several members of Congress decried the Bipartisan Campaign Reform Act of 2002 as an illegal act that "criminalizes free speech."

The judges listened as attorneys representing another significant part of the nation - the Justice Department, 19 states, more members of Congress and a set of reform-minded nonprofit agencies - defended the law as the will of Congress and salvation from a tidal wave of soft money that has "thoroughly debilitated the people's faith in the political system."

The challenge to the law, which will be decided by the U.S. Supreme Court next year, is poised to be the most important single decision in campaign financing since the 1976 Supreme Court decision Buckley vs. Valeo, which has shaped fund-raising law for the past quarter century.

"In addition to federalism and freedom of speech... this case is also about equality," said Kenneth Starr, the former solicitor general and Whitewater prosecutor who opened the day's arguments by attacking the new law's restrictions on national political parties using "soft money."  "It anoints winners and declares losers."

He was countered by Roger Witten, one of the attorneys representing Sens. John McCain, R-Ariz., and Russell Feingold, D-Wis., the congressional sponsors of the law, who said the bill was long overdue.

"This law is designed to repair a thoroughly broken campaign finance system that has been brought to its knees by massive cheating," Witten said, listing some of the former party chairs and members of Congress who had submitted written depositions about the problems caused by unlimited donations to political parties.  "They're all telling this court that money corrupts.  That unions, corporations and wealthy individuals... pay to play."

The day's arguments before a special panel of three federal judges represents the first legal challenge to the McCain-Feingold bill, as it is popularly known, since it was passed earlier this year after seven years of congressional debate.

There will be a half-day of hearings today.

The court was packed with more than 225 observers for Wednesday's arguments, which presented starkly different visions of the same law.

The defendants say the overarching theme of the new law is to plug loopholes that corporations, unions and political parties have exploited during the past 20 years to evade campaign finance laws.  Those donations to political parties for use in state and national elections, often in excess of $100,000, lead to the appearance of corruption, attorneys said.

Richard Bader, assistant general counsel for the Federal Elections Commission, told that court that soft money started with a "trickle" of $18 million in 1980, but had grown to a "river" of $458 million raised in the 2000 election cycle.

But critics counter that the new bill goes too far and would abridge First Amendment protections of free speech, divorce national political parties from their state affiliates and actually increase the influence of special interest groups, who would not be bound by the same restrictions on campaign spending as national political parties.

WORKING TOGETHER TO ATTAIN FAIRNESS