Congress, the President Will Find Easy Answers Won’t Cut It on 527s

Posted September 7, 2004 at 5:42pm

The dialogue over campaign finance reform has taken an interesting twist — it is all 527s, all the time. President Bush, his father, his campaign leader Mark Racicot, and his campaign spokesmen, among others, have called for the abolition of the “shadowy” groups and their ads, which are a regular presence in the campaign dialogue. House Administration Chairman Bob Ney (R-Ohio), a staunch opponent of the Bipartisan Campaign Reform Act, known commonly as McCain-Feingold, and has plans for hearings to curtail individual donations to the 527 groups. Roll Call reports that Ney sees BCRA as a failure because of the 527s — a judgment shared by many journalists and observers. Christopher Buckley, in an otherwise hilarious New York Times piece, says the 527s are entirely attributable to the 527s.

[IMGCAP(1)] Wrong, wrong and wrong. As a veteran of the campaign finance wars and one who helped shape the provisions of McCain-Feingold that relate to these “issue ads,” I find it amazing how much misinformation (and disinformation) permeates the discussion of these issues. Much of it, especially the reporting, reflects far more a hard-bitten and ingrained cynicism about reform than a deep-seated understanding of the law and the court rulings on the subject. Here are some facts:

• The president’s position, which campaign adviser Racicot has emphasized is longstanding, is that these groups and their ads should be completely banned. That is — how shall I put it? — ludicrous and fatuous. The good news, from my perspective, is that at last I have something in this area in which I can agree with George Will. First, let me note, there was nothing in BCRA directly about 527s, the president never said word one during the debate on the issue about 527s, and if he thought that the issue had been dealt with in the bill and has been shocked to find that it has not, as some of his spokesmen have suggested, then whoever briefed him on the contents of McCain-Feingold before he signed the bill should be fired.

On to the substance of the president’s plan. It is a total, frontal assault on the First Amendment. No mainstream reformer has ever taken a comparable position or made a proposal to ban groups or ban ads. Where is Sen. Mitch McConnell (R-Ky.) now? Why isn’t he harshly condemning the president for this outrageous idea? I shouldn’t single out McConnell; so far as I can tell, no opponent of McCain-Feingold other than the principled conservative Will has taken on the president.

Notwithstanding the overheated rhetoric used by McConnell and other reform opponents during the debate on McCain-Feingold, what the bill (and its relevant provision, authored by Maine Republican Sen. Olympia Snowe and Vermont Independent Sen. Jim Jeffords) aimed to do was make sure that all groups trying to elect or defeat candidates in elections operated under the same rules. Those rules affect the sources of money that can be used for broadcast ads clearly designed for electioneering that occur close to the elections, but in no way ban the groups from operating or ban the ads. For any such groups, whether they be 527s or other organizations under the tax law, they can run all the ads they want. But they cannot use labor union or corporate money to do so within 60 days of the election. That is a far cry from saying they are banned from running ads or even from existing.

• Groups that have electing or defeating candidates as their primary purpose are political committees, a definition not established by McCain-Feingold, but shaped by decades of black-letter law and court edicts. Political committees cannot use labor or corporate funds for campaign ads, and are also limited in the contributions that come from individuals. By any reasonable or logical standard, 527 groups like America Coming Together and Swift Boat Veterans for Truth are political committees and should be operating as such. But the Federal Election Commission has refused to designate them in this way, leaving them free to use unlimited sums from individuals for their campaign ads. It is this sham that McCain has roundly condemned, but it has neither been precipitated by McCain-Feingold nor is it predicated on reform — the FEC decision ignored previous law and precedent as much as it did McCain-Feingold.

• The idea that 527s have proven the emptiness of reform is also ludicrous. Here are some numbers: Through June, the Democratic and Republican Party committees, national and Congressional, had raised $611 million, more in hard money than they had raised in hard and soft money combined in the past presidential cycle. Up to his nominating convention in Boston, John Kerry had raised $233 million; George Bush to that point had raised $242 million (it is now about $250 million). All of that, of course, is hard money. The 527 groups have raised so far an estimated $165 million. That means the parties and the candidates have outraised these groups by more than 6-to-1! Reform opponents confidently predicted that if BCRA were enacted, the parties would shrivel and die and the outside groups would overwhelm them. No. True, more money will flow to these 527s in the next two months — but so will money to the parties, not to mention the $150 million in public money to the candidates. It is parties, newly energized with armies of small donors and massive get-out-the-vote drives, and candidates which are dominating the presidential election process, not 527s or other groups.

• The first Swift Boat Veterans for Truth would not have been banned or curtailed under any realistic campaign finance regime. It was an ad that cost around $500,000, an amount that would be easy for any such group, even if defined as a political committee, to raise and spend. (SWVT has raised far more than that in small individual contributions.) The brilliant way in which the ad and the group manipulated the media, through the initial leaks to The Drudge Report, the relentless focus by Rush Limbaugh and Sean Hannity, the pickup by the New York Post, and the subsequent heavy focus by other media organizations including The Washington Post, The New York Times and the networks, gave it $20 million of publicity for 1/40th of the cost.

• If wealthy individuals want to put huge sums of money into influencing an election, they can do so even if they are barred from doing it through 527s. They can act as individuals, as they have been able to do so since the Buckley decision in 1976 and before. The kind of change Ney is contemplating — blocking contributions of more than $5,000 from individuals, whatever the nature of the 527 group — won’t work.

• 527 groups existed long before BCRA was enacted. A huge loophole in internal revenue regulations enabled groups designated as political organizations to avoid disclosure or even tax returns. Some reform, including basic disclosure, was enacted before BCRA at the behest of Sen. Joe Lieberman (D-Conn.) and others. But we need more robust and timely disclosure of their activities. And any of these groups that are clearly set up primarily to influence the course of an election or elections should be treated as a political committee. It may take Congress to ensure that such action occurs. But the 527s are not going to overwhelm the campaign messages of the parties or the candidates — not even close.

Norman Ornstein is a resident scholar at the American Enterprise Institute.