Senate to enter 527 battle

The Hill ^ | 2/18/04 | Alexander Bolton

[Valin]

Senate Rules Committee Chairman Trent Lott (R-Miss.) plans to hold hearings on the emergence of 527 soft-money fundraising groups, significantly expanding the GOP assault on what has become known as the Democratic “shadow party.”

Lott’s plans will enhance the position of Republican leaders and their unlikely allies in the campaign finance reform community who want strict curbs on these groups, which plan to spend over $300 million this year to influence federal races.

Republicans and campaign finance reformers traditionally have locked horns over efforts to regulate the campaign finance system.

Hopes of restraining the groups flagged this week when Bradley Smith, the GOP-appointed chairman of the Federal Election Commission (FEC), submitted to the five other members of the commission a 37-page proposal arguing that the 527s should be allowed to raise and spend large amounts of unregulated soft money.

The commission is scheduled to vote today on an advisory opinion that would in large measure lay out how the 527s can raise and spend such contributions. The groups are named after a section of the U.S. tax code.

Since the enactment of campaign finance reform at the end of 2002, political operatives, primarily Democrats, have set up nominally independent soft-money funds to promote favored candidates and issues.

Though Smith’s newly revealed position on 527s augurs that they will be allowed to have a major impact on this year’s election, growing congressional concern over the groups may sway the commission before it issues final rules for them sometime this summer.

“There are questions about how they operate, on both sides of the spectrum,” Lott said.

He said the focus of his hearings would be to determine “where a lot of that soft money goes,” adding that the groups “are clearly intended to circumvent the law, whether you agree with the McCain-Feingold [campaign finance reform] law or not.”

Speaking of the bulk of political contributions, Lott said, “Eventually it’s going to go into a sort of underground operation. I would rather that things go through the parties.”

Lott said that Sen. John McCain (R-Ariz.) also has pushed for Senate hearings on 527 groups, and Lott added that he planned to hold them in either March or April.

In November, House hearings to oversee the emergence of these fundraising groups elicited fierce condemnations from Democratic lawmakers and political operatives, who called the proceedings “partisan” and reminiscent of a political “witch hunt.”

At that time, the Republican National Committee (RNC) also launched a broadside at the soft-money groups by sending letters to leading good-government groups questioning their silence on the 527s’ activities.

“Given the RNC’s attacks, it raises concerns about a coordinated effort to carry out a political agenda,” said Rep. John Larson (D-Conn.) of the House hearings.

One GOP lawyer said political aides to President Bush are more concerned than Senate and House Republicans about the growing strength of liberal soft-money groups because the largest of these groups will focus their resources on the White House race. For example, the goal of one group, America Coming Together, is to “defeat President Bush and elect progressive officials at every level in 2004.”

Since last fall, three watchdog groups — Democracy 21, the Campaign Legal Center and the Center for Responsive Politics — filed a Federal Election Commission complaint against two of the biggest liberal 527s and another 527 headed by Majority Leader Tom DeLay’s (R-Texas) former chief of staff.

Discussions of whether to regulate 527s have taken on a partisan tone because Democratic-allied 527s, such as America Coming Together and the Media Fund, are expected to outraise their Republican counterparts significantly.

Operatives such as Jim Ellis, DeLay’s top political adviser, predict that Republican allies will not assemble a fundraising structure to match the Democrats’ shadow party.

Along with the RNC’s efforts and the House hearings, Lott’s plans can be seen as the third prong in the GOP effort to keep these groups in check, creating common cause with campaign finance groups that also view the formation of 527 groups as an effort to circumvent the law.

Even if Smith is able to recruit the votes of three other commissioners to allow 527 groups to continue raising and spending soft money, as is expected, Lott’s actions may sway the commission down the road.

“I think it’s possible,” said Smith of the prospect that the commission may alter its stance on 527s between this week, when it issues an advisory opinion, and this June, when it approves new rules on the matter. “I pushed for rulemaking because it allows us to get more arguments.”

At the FEC, rulemaking is a more formal process than issuing advisory opinions, thus allowing lawmakers, party lawyers, campaign finance reformers and interest groups greater opportunity to share their views with the commission.

Nevertheless, the commission is likely to issue an unambiguous statement today on the legality of these groups.

“We need to give people a red light or a green light,” said Smith. “We’re not going to give a cautionary yellow light. I’m not going to let the committee split three-three on that.”

That implies that Smith is ready to switch his stance on 527s to ensure that the commission issues a preliminary ruling one way or the other on shadow party structures.

Meanwhile, campaign finance groups pledged to fight alongside Republicans to make sure that 527 groups do not have a major influence on federal elections.

“We’re determined to see the new law work properly and are determined to fight any efforts to blatantly circumvent the law and inject soft money into federal campaigns,” said Fred Wertheimer, president of Democracy 21. “We’re going to fight this every step of the way throughout the year.”

[Crazieman]

Hah, because Dems can't raise money from Joe Average American, they have shady loopholes to get money out of groups with deep pockets.

[goldstategop]

While I agree with Bradley Smith, the truth is the Democrats new-found appreciation of the connection between money and free speech is a ploy to protect their new-found wealth in the so-called 527 groups.

[Always Right]

The GOP should be forming their own groups....

[Valin]

They do.
http://www.gwu.edu/~action/2004/interestg.html

Americans for a Better Country (ABC) is a Section 527 committee. In a November 18, 2003 letter (PDF) to the Federal Election Commission seeking an Advisory Opinion, ABC requested answers to numerous questions in order ensure that its activities--and those of other Section 527s--comply with the Federal Election Campaign Act of 1971, and the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold). The letter states "ABC wishes to engage in a variety of fundraising and political activities in the 2003-2004 election cycle, culminating in a massive voter mobilization effort emphasizing voter registration and get-out-the-vote ("GOTV") activities. For both fundraising and political purposes, ABC wishes to state in a press release announcing its launch that its purpose is to reelect President Bush and defeat the Democratic nominee." Statute requires the FEC to issue an opinion within 60 days.

[Valin]

Nothing really "shady" about it, I don't like it, but it not really shady.
A brief history of the REAL problem, from the Hoover Institute
Federal Campaign Finance Legislation

http://www.campaignfinancesite.org/history/financing1.html
This selection was excerpted from www.opensecrets.org

---

1867: Naval Appropriations Bill
The first federal attempt to regulate campaign finance · Prohibited officers and employees of the government from soliciting money from naval yardworkers
1883: Civil Service Reform Act
Extended the above rule to all federal civil service workers · Previously, government workers were expected to make campaign contributions in order to keep their jobs.

1905: Teddy Roosevelt's Message to Congress
President Theodore Roosevelt proposed that "(a)ll contributions by corporations to any political committee or for any political purpose should be forbidden by law." The proposal, however, included no restrictions on campaign contributions from the people who owned and ran corporations. Roosevelt also called for public financing of federal candidates via their political parties.

1907: Tillman Act
Prohibited corporations and nationally chartered (interstate) banks from making direct financial contributions to federal candidates · However, weak enforcement mechanisms made the Act unenforceable.

1910: Federal Corrupt Practices Act
Established disclosure requirements for U.S. House candidates · Legislation in 1911 extended requirements to cover U.S. Senate candidates and established expenditure limits for House and Senate campaigns. Lacking mechanisms for verification and enforcement, these measures proved meaningless.

1925: Federal Corrupt Practices Act (Revised)
Codified and revised previous campaign reform legislation regarding expenditure limits and disclosure · Served as basic federal campaign finance law until 1971 · However, with power of enforcement vested in Congress, the Act was routinely ignored.

1940: Hatch Act Amendments
Set limit of $5,000 per year on individual contributions to a federal candidate or political committee (but it didn't prevent contributors from giving that amount to multiple committees, each working for the same candidate) · Made campaign finance regulations applicable to primaries as well as general elections · Barred contributions to federal candidates from individuals and businesses working for the federal government

1943: Smith-Connally Act
Extended to unions the prohibition on contributions to federal candidates from corporations and interstate banks (following major increase, beginning in 1936, in labor's use of union dues to support federal candidates)

1944: Formation of First PAC
First political action committee (PAC) was formed by Congress of Industrial Organizations (CIO) in 1944 to raise money for re-election of President Franklin D. Roosevelt. Because PAC money came from voluntary contributions from union members, rather than from union treasuries (i.e., union dues), it was not prohibited by the Smith-Connally Act.

1947: Taft-Hartley Act
Made permanent the ban on contributions to federal candidates from unions, corporations, and interstate banks, and extended the prohibition to include primaries as well as general elections

1967: House Campaign Finance Reports Collected for First Time
Former Congressman W. Pat Jennings was first Clerk of the House of Representatives to perform his duty under 1925 Corrupt Practices Act to collect campaign finance reports and to report violators · However, the Justice Department ignored his list of violators.

1971: Federal Election Campaign Act (FECA)
Repealed Corrupt Practices Act and created comprehensive framework for regulation of federal campaign financing of primaries, runoffs, general elections, and conventions · Required full and timely disclosure · Set ceilings on media advertising · Established limits on contributions from candidates and their families · Permitted unions and corporations to solicit voluntary contributions from members, employees, and stockholders, and allowed union and corporate treasury money to be used for overhead in operating PACs

1971: Revenue Act
Companion legislation to FECA · Created public campaign fund for eligible presidential candidates (starting with 1976 election) through provision of voluntary one-dollar check-off on federal income tax returns · Provided option of $50 tax deduction (for individual filers) for contributions to local, state, or federal candidates (provision eliminated in 1978) or $12.50 tax credit (amount raised to $50 in 1978, provision eliminated in 1986)

1974: FECA Amendments (Post-Watergate)
Provided option of full public financing for presidential general elections, matching funds for presidential primaries, and public funds for presidential nominating conventions · Set spending limits for presidential primaries and general elections, and for House and Senate primaries · Revised (previously unenforced) spending limits for House and Senate general elections · Created individual contribution limit of $1,000 to a candidate per election and PAC contribution limit of $5,000 to a candidate per election (triggering PAC boom of late '70s) · Limited aggregate individual contributions to $25,000 per year · Limited candidates' personal contributions to their own campaigns · Limited independent expenditures on behalf of a candidate to $1,000 per election · Ended 1940 ban on contributions from individuals and groups working on government contracts · Abolished limits on media advertising · Created Federal Election Commission (FEC) to administer campaign law, with Congress to appoint four of six commissioners

1976: Buckley v. Valeo
Restrictions in FECA (as amended in 1974) challenged as unconstitutional violations of free speech · Supreme Court upheld disclosure requirements, limits on individual contributions, and voluntary public financing, and affirmed President's authority to appoint all six FEC commissioners · Court struck down, as infringement on free speech, limits on candidate expenditures (unless candidate accepts public financing), limits on contributions by candidates and their families to their own campaigns, and limits on "independent expenditures" (election spending not coordinated with candidates or their committees).

1976: FECA Amendments (following Buckley )
Brought FECA into conformity with Buckley decision · Limited individual contributions to national parties to $20,000 per year, and individual contributions to a PAC to $5,000 per year

1979: FECA Amendments
Increased amount volunteers could contribute in-kind (use of home, food, vehicle) from $500 to $1,000 · Raised threshold for reporting contributions from $100 to $200 · Effectively prohibited FEC from conducting random audits · Allowed state and local parties to promote federal candidates by spending unlimited amounts on campaign materials (signs, bumper stickers, etc.) used by volunteers and on voter registration and get-out-the-vote drives

Everytime congress trys to "fix" campaign finance, it just opens up more problems.