Chambers in Conflict on 527s

Role of Soft Money at Issue

Posted April 19, 2005 at 6:18pm

With the House set to hold a hearing today examining the role of 527 organizations in federal elections, the two chambers increasingly appear poised to take divergent tacks in curtailing the influence of the independent soft-money groups.

While the Senate is ready to move legislation out of committee that would restrict the activities of 527s, the House seems more likely to attempt to “level the playing field” by allowing the political parties to once again raise and spend soft money.

Unlike the parties, organizations that operate under Section 527 of the tax code do not have contribution limits, spending caps or restrictions on who can donate to them.

House Administration Chairman Bob Ney (R-Ohio) has avoided explicitly delineating what course he plans to take. But he also has not hidden his distaste for the 2002 Bipartisan Campaign Reform Act, which he believes elevated the importance of the largely unregulated independent groups at the expense of the political parties.

Ney said in an interview that he hopes the hearing will allow Members to accurately “judge the effectiveness” of BCRA, a law he believes created a loophole “a Mack truck could run through.” He was referring to the role of 527s, which poured $405 million into the 2004 election, much of it in unrestricted soft money from individuals, corporations and labor unions.

The Ohio Republican has indicated a willingness to take a serious look at legislation introduced by Reps. Mike Pence (R-Ind.) and Albert Wynn (D-Md.), both of whom are slated to testify. Their bill would undo certain portions of the 2002 campaign finance legislation and the 1974 Federal Election Campaign Act.

Instead of reining in 527s, as a bill moving through the Senate would, Pence and Wynn are seeking to give the parties parity in the soft-money chase. They believe BCRA went too far in imposing constraints on the parties, unjustly weakening them vis-à-vis 527 groups. Ney’s rhetoric would seem to indicate his leanings in that direction, if he is not already firmly in Pence and Wynn’s camp.

A GOP aide familiar with the issue in the House said Pence and Wynn’s legislation has “a wink and a nod from the Speaker’s office,” making it likely that their bill, or some piece of legislation, will be brought to the floor.

Speaker Dennis Hastert’s (R-Ill.) office did not return calls seeking comment.

Ney scheduled his hearing for the same day and time Lott had planned to hold a hearing on the other side of the Capitol. Lott is ready to mark up the bill he introduced with Sens. John McCain (R-Ariz.), Russ Feingold (D-Wis.) and Charles Schumer (D-N.Y.) that would prohibit 527s from raising and spending soft money to influence federal elections. The Senate Rules and Administration Committee, which Lott heads, held a hearing on the measure last month.

Lott subsequently pushed his markup back a week for unrelated reasons — Ney said the scheduling was coincidental from the beginning — but the idea of competing hearings underscores the subtle competition between the chambers on the issue.

“I think this is part of the reason the Speaker wants to get this out there,” the GOP aide said.

Since McCain, Feingold, Lott and Schumer introduced their 527 bill in early February, it was clear to nearly all involved that legislation to reduce what many believed was 527 groups’ disproportionate influence on federal elections would move quickly.

Lott, who had opposed BCRA, provided the group with an unexpected ally. President Bush has weighed in several times, even personally giving Lott his support, according to the Mississippi lawmaker. Lott said Tuesday that Senate Majority Leader Bill Frist (R-Tenn.) has also expressed a desire to move something to the floor.

But what was also clear early on, at least to some of the bills’ sponsors, was that the House leadership might craft its own measure.

At the press conference announcing the legislation, Rep. Christopher Shays (R-Conn.) — who along with Rep. Marty Meehan (D-Mass.) introduced a companion measure in the House — acknowledged the strong likelihood that the issue would move through his chamber expeditiously, although not necessarily with their bill as the vehicle.

Shays and Meehan, who co-sponsored BCRA along with McCain and Feingold, will testify before House Administration today.

Also scheduled to appear are Bob Bauer, of the Political Law Group at Perkins Coie and a frequent counsel to Democratic leaders, party committees and candidates; Cleta Mitchell, partner at Foley and Lardner and counsel to the National Republican Senatorial Committee; and Larry Gold, counsel to the AFL-CIO.

The McCain-Feingold-Lott-Schumer-Shays-Meehan bill would take 527s out of the soft-money business when it comes to federal elections. It would require 527s to register as political committees with the Federal Election Commission (they currently are only regulated by the Internal Revenue Service). The groups would have to live under the same hard-money limits as the national parties and individual lawmakers’ campaign committees. No longer could they use soft money to buy advertising mentioning only federal candidates, a practice made infamous with such groups as the Swiftboat Veterans for Truth and

By contrast, Pence and Wynn’s proposal would remove the aggregate contribution limits that BCRA imposed on individuals giving to influence federal elections, thus allowing them to avoid choosing between donations to parties, candidates and independent groups; remove limits on how much the parties can spend in coordination with candidates; and allow state and local parties to spend soft money on voter registration drives for elections, including those involving federal candidates.

McCain called moves to undermine the 2002 legislation he co-sponsored by piggybacking on 527 reform “transparent.” Many of the same people who opposed BCRA are behind the efforts, he said.

“They didn’t succeed then. They won’t succeed now,” McCain predicted.