Rein In 527s

Posted May 11, 2004 at 6:09pm

The Federal Election Commission faces its moment of truth on Thursday. If the commission fails to require so-called 527 political committees to comply with federal election law — an outcome that seems increasingly likely, given the recommendation the FEC general counsel released Tuesday to put off a decision until the next campaign cycle — then the agency will find itself besieged by demands that its current structure be scrapped and replaced.

The FEC is not without options. The commission has before it a bipartisan proposal from Republican Commissioner Michael Toner and Democrat Scott Thomas that would require 527s to cease raising and spending unlimited amounts of corporate, union and individual soft money for the purpose of influencing federal elections. In other words, they would have to do what political parties, federal candidates and political action committees are already required to do under the Bipartisan Campaign Reform Act.

BCRA did not explicitly cover 527s — that is, entities registered under Article 527 of the Internal Revenue Code — but the Supreme Court decision that upheld BCRA certainly opens the door for the FEC to rein in 527s under the same regulatory structure. The Thomas-Toner proposal would do so, and thus would end what is turning into a massive pair of end-runs around the law. Right now, Democrats are doing most of the running, but if the FEC fails to act, Republicans can be expected join them wholeheartedly.

Thomas-Toner, among other things, would correct the FEC’s previous rules that allow groups such as the pro-Democratic America Coming Together to finance voter registration and mobilization activities in 17 presidential battleground states almost entirely with soft money raised in unlimited amounts. ACT makes no bones about the fact that its purpose is to defeat President Bush. So Thomas-Toner would require at least 50 percent of such activities to be financed with hard money raised under BCRA limits.

In the meantime, another Democratic 527, The Media Fund, is spending millions of dollars on television ads designed to defeat Bush, but it claims it does not have to register with the FEC, or observe BCRA limits, because the ads to not “expressly” advocate voting against him. Thomas-Toner would require registration and impose limits on any group whose “major purpose” is to influence federal elections. The proposal aligns with the Supreme Court decision tossing out “express advocacy” as the test of “electioneering.”

Some politically active “educational” groups organized under sections 501(c)(3) and 501(c)(4) of the IRS code — led by People for the American Way — are protesting that the Thomas-Toner proposal would inhibit their fundraising and activities. But it should not, especially if its language makes it explicit in all possible ways that it applies only to 527s attempting to influence federal elections.

It’s impossible to tell at this moment how the six members of the FEC will align themselves on the 527 issue. Democrat Ellen Weintraub and Republican Brad Smith are opposed to regulating 527s at present; Republican Dave Mason and Democrat Dan McDonald hold the balance of power. We hope they’ll vote to rein in 527s. We disagree with the FEC general counsel’s recommendation that the agency punt the issue for the time being: The time to act is now, before the 2004 election is over.

We’re pleased that Senate Rules and Administration Chairman Trent Lott (R-Miss.) has promised to hold hearings on proposals to change the FEC’s structure. These arise from the perception that it is a “failed agency” unable to act on controversial issues. The 527 decision will be a litmus test of the FEC’s effectiveness.