Lott, McCain Prepare Bill to Crack Down on 527s

Posted January 25, 2005 at 6:33pm

Sens. Trent Lott (R-Miss.) and John McCain (R-Ariz.) are planning to roll out legislation in the next few weeks that would crack down on the so-called 527s that proliferated during the 2004 election cycle — a move that could propel the hot-button campaign finance issue to the front of the Congressional agenda.

The bill will be the centerpiece of Rules and Administration Committee hearings that Chairman Lott is planning to hold in March, an aide confirmed.

Lott, according to those close to him, decided to join McCain in pursuing the legislative route following his 2004 hearings, during which members of the Federal Election Commission insisted their hands were tied on 527 groups and that Congress would have to act if it wished to rein in what some critics have referred to as “rogue” committees.

At that hearing, Bradley Smith, a Republican FEC commissioner, told Lott he was simply not in a position to act.

“One thing I promised, sitting in this very room four years ago for my confirmation, was that those kinds of issues I would leave up to Congress,” said Smith. “It was not my view that the commission should overreach, that the commission should take it upon itself to say, ‘This looks like a circumvention of the law.’”

While no details on the forthcoming bill were available, several sources said it would most likely resemble legislation that Sens. McCain and Russ Feingold (D-Wis.) offered last year. That bill would have required 527s to register as political committees and to comply with existing contribution limits. That measure never made it out of committee.

Lott said Tuesday that while he had not yet had a chance to go over the bill’s specifics with McCain, his colleague from Arizona had “outlined it briefly and it looks like it is OK to me.”

Explaining his reform rationale in a written statement to Roll Call, Lott characterized the proliferation of 527s as an “unintended consequence” of the Bipartisan Campaign Reform Act in 2002.

“I had hoped that the playing field would be equalized among all the players in the federal election process. As is turns out, the playing field is not equal, and the money has merely shifted from one side of the street to the other,” Lott said. “It’s like trying to nail Jell-O to the wall. The money simply has been relocated from the national political party headquarters to the offices of partisan 527 groups.”

Lott said that while ideally he’d prefer federal campaign finance laws be modeled after the state of Virginia’s: “no limits but full instantaneous disclosure. … [I]n the absence of adopting the ‘Virginia plan,’ I think all 527s that spend money to specifically influence federal elections should be required to register and report with the Federal Election Commission.”

He noted that under the current scheme, 527s not registered with the FEC only disclose their finances on a quarterly basis and are not subject to any contribution limits.

“All 527s should be treated equally under the FEC regulations, and there should be full disclosure,” Lott said.

Across the Capitol, House Administration Chairman Bob Ney (R-Ohio) also has vowed to take a hard look at the loosely regulated political advocacy groups, which spent more than $300 million in the during the 2003-04 election cycle.

In an interview with Roll Call earlier this month, Ney promised to hold hearings on 527s and said he personally favors contribution limits and disclosure requirements for the groups, which organize under Section 527 of the Internal Revenue Service code.

McCain and Lott could get a boost in their effort from the commander in chief.

While on the campaign trail last year, White House spokesman Scott McClellan said that President Bush told McCain in a telephone call that he would be “willing to pursue legislative action and work with Senator McCain on that” if efforts in the courts failed to restrict the activities of 527s.

“The president and all of us recognize the 527s are a giant loophole, and the FEC fails to enforce the law, so we have to act legislatively,” McCain said.

But while McCain said he expected Bush to support his legislation, the Arizona Republican added he was not sure if his Democratic counterparts beyond Feingold would back the bill.

“The president is strongly in support of addressing the 527 issue,” McCain said. “I don’t know how the Democrats are going to treat this, but there is going to be increased pressure. The president feels very strongly about this issue. That helps when the leader of the Republican Party feels strongly about it.”

Lott noted that he has “been saying since last fall that we should have an early, serious hearing about this matter, hopefully it will be bipartisan and we need to make some changes.”

Lott said his original intent was to schedule a hearing on the issue in February but given the current Senate calendar, March was a safer bet.