House limits contributions to nonprofits

/ Source: The Associated Press

The House on Wednesday voted to limit the multimillion-dollar donations to nonprofit groups that changed the face of American politics in the 2004 presidential election.

Republican support carried the day in the 218-209 vote to cap contributions to "527" political groups. The outcome was a sharp turnaround from 2002, when Republicans resisted the successful Democratic-led legislation to limit campaign spending.

The legislation requires 527 groups to abide by campaign contribution limits.

Donors would thus be able to contribute only $25,000 a year for partisan voter mobilization activities and $5,000 a year for direct expenditures on federal elections.

That would be a radical change from donations in the 2003-2004 election cycle, when businessman George Soros gave more than $23 million to Democratic-aligned 527 groups such as Media Fund and America Coming Together, and Houston homebuilder Bob Perry contributed more than $8 million specifically to help the Swift Boat Veterans for Truth group that questioned John Kerry’s Vietnam War record.

The 527 groups, named for the section of the tax law that covers them, are tax-exempt organizations that use voter mobilization and issue ads to influence federal elections. They blossomed after Congress enacted a campaign finance law in 2002 that banned federal candidates and the national parties from accepting unlimited donations from individuals, unions and corporations.

Democrats assail bill as ‘mean-spirited’
These groups raised more than $400 million in 2003-2004, with organizations supporting Kerry or opposing President Bush bringing in $266 million, according to the Political Money Line campaign finance tracking service.

It’s that advantage that is behind Democratic claims that the main GOP objective is to undercut groups antagonistic to Republican causes. They say constricting 527s alone would simply shift political contributions to other business and social welfare organizations, categorized as 501(c) groups, that have some restrictions on political activities but, unlike 527s, don’t have to identify donors.

It would “hamstring independent groups while they keep open the flow to trade organizations that can spend unlimited amounts of money,” said Rep. Juanita Millender-McDonald, D-Calif. “They are restricting unions and these independent groups. That is just mean-spirited.”

But Rep. Christopher Shays, R-Conn., sponsor of both the 2002 law and the 527 bill with Rep. Marty Meehan, D-Mass., called it an “outrage” that Democrats who supported spending limits four years ago are now balking at closing a loophole that lets individuals contribute millions. He said just 25 people accounted for $142 million in donations in the last election.

Measure would repeal some donation limits
The House bill also would repeal current law that limits the amount a party can spend in direct coordination with candidates.

Fred Wertheimer, president of the campaign finance watchdog group Democracy 21, said his organization opposes that provision because current law provides a buffer for individuals giving the parties money that goes directly to a specific race. But he said his group still supports the overall bill.

“Most Democrats and most Republicans are approaching this particular fight on partisan grounds,” Wertheimer said. “But it is a simple proposition that groups whose purpose is to influence federal elections and are spending money to influence federal elections should comply with campaign finance laws.”

Good-government groups such as Democracy 21 and Public Citizen, normally allied with Democrats on campaign finance issues, have sided with Republicans on this matter.

Some Republicans opposed
On the other hand, several conservative groups that consider spending limitations a free speech issue have joined Democrats in opposing the legislation. “Legislation to alter the state of 527s is a breathtaking assault on First Amendment free speech rights,” Pat Toomey, president of the conservative Club for Growth, said in a statement. “Republicans may think they are making a wise political move, but subverting the Constitution to make political gain is inexcusable.”

The GOP leadership rejected inclusion of proposals by Rep. Mike Pence, a leading Republican conservative, to further deregulate spending limits. Pence indicated he would vote against the bill.

House GOP leaders originally sought to combine 527 legislation with a complex lobbying and ethics bill now working its way through House committees. But they decided to address the issue separately, passing the 527 bill before lawmakers return home next week for the two-week Easter recess.

The Senate, which passed a lobbying bill last month that does not address 527 or other campaign finance issues, would still have to consider the House 527 bill.