527 Reform Bill Introduced
September 23, 2004
By Dori Berman
WASHINGTON–Campaign finance reform advocates, including Rep. Christopher Shays, Republican of Connecticut, introduced new legislation Wednesday that would force greater disclosure from non-profit political organizations, known as 527s, and force them to abide by federal contribution limits.
Named for the section of the tax code governing their status, the groups can currently raise unlimited sums of money with limited disclosure. Such 527s as “Swift Boat Veterans for Truth” have sparked controversy during this year’s election with their television ads.
The legislation, also sponsored by Marty Meehan, Democrat of Massachusetts, among others, comes on the heels of a lawsuit the pair filed last week against the Federal Election Commission, or FEC, accusing it of allowing a loophole through which the 527s can avoid the 2002 campaign finance overhaul commonly known as the McCain-Feingold law. Other sponsors of the bill included Sens.
John McCain, Republican of Arizona, Russ Feingold, Democrat of Wisconsin, and
Senator Joseph Lieberman of Connecticut.
“What is happening with 527s is basically illegal, but the FEC has given them
cover to do what they’re doing,” Shays said at a news conference. “We’re forced to take this action in two ways—our court action and this law—but we shouldn’t have had to do either.”
The proposed law would require all 527s that raise and spend more than $25,000
in connection with federal candidates to register with the election commission. Under the law, ads run by the groups that promote or attack federal candidates would have to be paid for only with “hard money,” raised from individuals in compliance with contribution limits.
The bill would also mandate that if a group has both a federal and non-federal account, other campaign activities, such as get-out-the-vote drives that mention a political party or federal candidate must use at least 50 percent hard money.
“Soft-money” contributions – from funds raised without federal limits — would
be capped at $25,000 per individual per year. The bill would prohibit corporations and unions, already unable to donate directly to federal candidates, from contributing to non-federal accounts. Under current law, individuals can contribute up to $5,000 per year to the federal accounts of political committees.
Shays pointed out that the groups would still be allowed to produce negative ads, but they would have to use hard money.
Diane Farrell, Shays’ opponent for the 4th district congressional seat, said in a statement, “I find it ironic that Christopher Shays chose today to seek reform of 527 groups when three months ago he signed a joint statement issued with [other House Republicans], urging members of his own party to donate to these groups in support of the President’s re-election campaign.”
Farrell referred to an Associated Press report following the FEC decision to allow Democratic 527s to continue funding television ads that attacked President Bush.
Shays responded that he was acting in response to the FEC decision and did not expect Republicans to “just hold up their hands and not respond.”
He added, “I would oppose any effort of any 527 to assist me in my campaign.”
McCain elaborated at the news conference that the intent of the bill is not to protect politicians from attacks but to prevent anonymous assaults that violate contribution limits.
“We never wanted to try to prevent people from speaking out,” he said. “We just
didn’t want corporate money or unions …with unlimited funds to drown out the voices of individual Americans.”
The new bill’s sponsors insisted that while the 527 loophole is in violation of the McCain-Feingold law, the law has been effective for other aspects of campaign finance.
Small donations from individuals have seen tremendous growth, while corporate contributions have dropped significantly, they said. That was the intent of the
2002 law, Meehan said.
