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Split Over Policy, but United on Process When It Comes to 527s

Campaign finance issues seem to provoke one of two responses — fits of outrage or paralytic boredom. Recently at the Federal Election Commission we witnessed both — at the same time in some cases, which is no mean feat. Pundits and operatives trembled with excitement over our potential regulation of so-called 527s (certain tax-exempt political organizations), yet were nonchalant about the details — and limits — of the law we enforce. Here, we will place in context the debate over the use of nonfederal funds by political committees, and defend what we believe would be a better means of regulating them.

The commission recently responded to a lengthy request from Americans for a Better Country, a Republican group asking numerous questions about how an independent federal political committee could use nonfederal funds in various advertisements, and in voter registration, voter identification and get-out-the-vote activities. (After the commission declined to postpone substantive consideration of the issues and rejected our first choice on a 3-3 vote, the vice chair proposed what she believed to be the least bad alternative likely to get four votes.) We set forth here our preferred analysis.

To be sure, reform as contained in the Bipartisan Campaign Reform Act, and as upheld by the Supreme Court in McConnell v. FEC, changed the playing field dramatically for many political actors, in particular party committees, federal candidates and officeholders, and corporations and labor organizations. But not necessarily for everyone. In BCRA, rather than attempting to address every perceived problem in the realm of campaign finance, Congress picked its targets to maximize the bill’s chances of passing and of withstanding constitutional scrutiny.

In our view, Congress did not require the commission to change how groups already registering and reporting under the act manage their mixed federal and nonfederal activities. The commission has in place a pre-BCRA framework to allocate mixed activities of nonparty federal committees with nonfederal accounts, and this general framework survived BCRA. The commission may opt to change these allocation rules, as a matter of choice, although not, we believe, mandate. But this is the stuff of political accountancy, resistant to sound bites and talking points, and thus remains the neglected part of the story.

So, when the commission told ABC that messages “promoting, supporting, attacking or opposing” a federal candidate must be paid for with hard money, in our view it bootstrapped a rule BCRA applied only to party committees into the rules applicable to all committees. Under this interpretation, political committees are treated no better, and in some cases worse, than party committees, despite every indication that Congress meant to focus on party and officeholder activity in BCRA. Indeed, eight Senators (seconded by 58 House Members) wrote to us to emphasize that Congress knowingly chose to address the raising and spending of soft money by parties and officeholders, and not to “aim similar restrictions at political organizations or tax-exempt groups that are neither controlled by, nor coordinated with, parties or candidates.”

The record before the court documented the appearance of corruption that arises when officeholders are involved in the raising and spending of large soft-money donations. But the possibility that soft money corrupts the system even when it is given to independent nonparty committees, without any involvement by officeholders, was not at issue in the McConnell litigation and thus was not argued to or decided by the court.

BCRA’s sponsors had reasons for selecting party committees for special regulation. As explained by Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.) and Reps. Christopher Shays (R-Conn.) and Marty Meehan (D-Mass.) in McConnell v. FEC filings, “[u]nlike interest groups, which pursue an issue-based agenda that transcends the election of candidates, parties are primarily and continuously concerned with acquiring power through electoral victory. Parties never engage in public communication without regard to electoral consequences.”

The Supreme Court in McConnell v. FEC also recognized that Congress could treat some groups differently from others without running afoul of constitutional equal protection guarantees. The court stated: “BCRA imposes numerous restrictions on the fundraising abilities of political parties. … Interest groups, however, remain free to raise money to fund voter registration, GOTV activities, mailings, and broadcast advertising (other than electioneering communications).”

To the issue of whether this distinction was proper, the McConnell ruling states: “Congress is fully entitled to consider the real-world differences between political parties and interest groups when crafting a system of campaign finance regulation.”

The commission is about to begin a rulemaking in which we will consider whether the Supreme Court’s McConnell decision leads us to rethink our regulations governing political committees. For practical reasons, a rulemaking is better suited for consideration of these fundamental questions. The commission may consider the universe of available options for policy-making, unrestricted by the limited facts (or particular agenda) raised by the requester of a particular Advisory Opinion.

The commission can receive comments, hold hearings to take oral testimony and probe the views of witnesses. This rulemaking will permit the commission to consider carefully the scope of options available under our act, the ramifications of a change in its approach, and the conforming revisions necessary to other parts of our regulations. The two of us may or may not end up agreeing on the content of the resulting regulations, but we do agree on the process.

In our view, advocates of good government and a vibrant political system should embrace our position, as it stands for open access to the regulatory process and measured consideration of the rules that govern politics. But, since few things are more stupor-inducing than a dispute over process, we fear the debate has been shaped by partisans with short-term time horizons. We suggest that their apparent preference — do what you can by whatever means at hand — is no way to regulate politics.

Bradley Smith, a Republican, is chairman of the Federal Election Commission. Ellen Weintraub, a Democrat, is vice chair of the commission. The views contained here are those of the authors, and do not necessarily reflect the views of the commission.