Billion dollar political benefactors lurking

/ Source: National Journal

Poor John McCain... or so the story goes. Washed away by a tsunami of Democratic dollars, there's no way he can hope to defeat Barack Obama or Hillary Rodham Clinton in November.

But don't be so sure. Just as they did four years ago, shadowy soft-money groups are preparing to play a major role in the November elections, and signs increasingly point to another big year for the GOP nominee.

The potential impact of these groups is staggering: In 2006, so-called 527s and 501(c)(4)s for both parties spent about $430 million, according to the Center for Responsive Politics. In the last presidential race, they spent more than $611 million, and experts say 527 spending will probably approach $1 billion by November. So far, the groups have played a modest role in 2008 -- but don't be fooled. Experts agree that 527s and 501(c)(4)s are ramping up to stoke the cauldrons of controversy once Democrats settle their family fight.

As McCain struggles to keep pace with a Democratic fundraising machine showing unprecedented strength, GOP-friendly groups such as the American Future Fund and Freedom's Watch, which recently hired former Mitt Romney adviser Carl Forti to run its political operation, may just be McCain's best hope to level the financial playing field. "It will be McCain who benefits this fall, especially if Obama is his opponent," said University of Virginia's Larry Sabato. "There are so many issues surrounding race that McCain is never going to want to touch personally. And that's exactly what 527s are for.

"McCain can say, 'I don't have anything to do with them. I'm begging them to cease and desist. Sorry, I don't control them.' But the 527s still get the benefit of stirring the pot."

Indeed, the ingredients are there for a matchup in which outside groups play a big role for McCain, who doesn't appear to have the stomach for the more grisly topics on the trail; he said he regrets not reprimanding a woman who called Clinton a "bitch" last year in South Carolina, and he recently rebuked a radio talk-show host who tried to make hay out of Obama's middle name. (What sort of conversations would these groups initiate that McCain wouldn't dare touch? Take your pick. Between Obama and Clinton, the list is long.)

The increasing influence of these groups has created a new challenge for candidates trying to control the dialogue and tone of their races. Notably, however, the organizations operate largely outside the scope of government and, it seems, also avoid the intense scrutiny of many watchdog groups. "It hasn't been our focus," acknowledged Massie Ritsch, communications director of the Center for Responsive Politics, perhaps the most comprehensive tracker of campaign spending. "It's really not my area of expertise," conceded Ellen Miller, of the Washington, D.C.-based Sunlight Foundation.

Ironically, McCain tried to limit the impact of the very 527 organizations he now stands to benefit from. Under the McCain-Feingold law enacted in 2002, TV ads from 527 organizations had to cease 30 days before a primary and 60 days before a general election. The goal was to keep them from having an undue influence on the outcome. Last June, however, in a case involving a Wisconsin anti-abortion group, the Supreme Court ruled [PDF] that third-party groups -- unions, corporations or wealthy individuals -- can air TV ads right up to Election Day.

So far, most 527 activities during the 2008 election cycle have focused on the Democrats' bitter, protracted fight for the party's nod. Billionaire financier George Soros and major Democrat-friendly groups such as the Service Employees International Union (SEIU), EMILY's List and America Votes have spent millions.

Meanwhile, both sides are gearing up for a general election campaign this fall that promises to be just as competitive as the past two.

A coalition of liberal groups recently launched a $350 million effort to promote presidential and congressional candidates. The campaign, billed as the largest of its kind in history, is being led by, the AFL-CIO, and the Change to Win organization, with groups such as ACORN, Women's Voices Women Vote and the National Council of La Raza also taking part.

Still, neither party has fully come to terms with how to respond to the rise of 527s and foundations. "They're really convenient," said Sabato, who suggests that voters and the media should draw little distinction between candidates and the 527s that support them.

And what would happen if we did? "When we start to make the candidates responsible, the 527s won't be as effective, so they won't do it anymore," Sabato said. "Candidates could make it very clear to the people running these groups that not only did they not appreciate it, but they were eliminating their chance for influence if they were to be elected."

Ritsch said ambiguous court rulings may encourage 527s to see just how far they can go in promoting a candidate.

"On the one hand, 527s have been told not to behave like groups did in 2004, but they haven't been told what they can and cannot do," he said. "So they may play it extra cautiously, or they may proceed to push the envelope, knowing that it will take the [Federal Election Commission] a couple years to decide whether there was any illegality, and if so, what the fine will be.

"That fine could be a small fraction of the money they took in, which could just be the cost of doing business."