Critics of 527s Introduce Regulatory Bill

Posted September 22, 2004 at 5:24pm

Sen. John McCain (R-Ariz.) predicted an “explosion” of soft money in the next election unless his colleagues move to adopt a new bill aimed at controlling the independent political groups known as 527s.

The Arizona Republican also vowed that he and other key reformers would jump-start their drive to overhaul the Federal Election Commission early next year, declaring that the agency must be restructured to “function as an enforcer of laws, not an enabler of loopholes in the law.”

McCain’s 527 Reform Act — introduced Wednesday along with Sens. Russ Feingold (D-Wis.) and Joe Lieberman (D-Conn.) and Reps. Christopher Shays (R-Conn.) and Marty Meehan (D-Mass.) — would require all 527 groups to register as political committees unless they qualified for a narrow set of exceptions.

Registered 527s would be required to use only hard money to pay for such activities as the broadcasting of television ads that mention federal candidates. They would, however, still be able to raise small amounts of soft money.

The FEC allows federal political committees to keep a separate nonfederal account that they can use to pay for expenses that jointly affect federal and nonfederal elections. The new 527 legislation would require that such expenses be paid with at least 50 percent hard money and would place a $25,000 cap on contributions into that nonfederal account.

While members of the FEC last month adopted a similar 50 percent allocation formula to apply to 527s for mixed expenses, the agency did not put a limit on contributions to their nonfederal funds.

Feingold said that limiting the annual contributions to such accounts to $25,000 per donor is crucial to ensuring that “no more million-dollar soft-money contributions to pay for get-out-the-vote efforts in the presidential campaign.”

More importantly, reform proponents said, the agency failed to answer the question of whether such groups — which are spending millions on campaign-related election activity this election cycle — ought to be required to register with the FEC, as other PACs are.

“By bringing 527 groups working to influence federal elections under the same set of rules as every other political committee, the 527 Reform Act does the job the FEC has failed to do,” Shays said.

Under the proposal, the 527s that would qualify for exemptions from registering with the FEC would be those which raise and spend money solely in connection with nonfederal elections, state or local ballot initiatives or the nomination or confirmation of individuals to nonelected offices. Groups with less than $25,000 in receipts would also not have to register as political committees.

The bill’s unveiling followed a suit filed last week by Shays and Meehan in U.S. District Court. The suit challenges the FEC’s failure to craft stricter regulations on 527s. Shays predicted Wednesday that the court “could act before this election.” Last weekend, Shays and his colleagues won a major victory when a federal judge threw out 15 regulations enacted by the FEC on the grounds that they were contrary to the intent of Congress.

Joanna Stein contributed to this report.