'527' groups rewrite campaign rules

/ Source: msnbc.com

Anti-Bush donor George Soros and the “Swift Boat Veterans for Truth,” a group of Navy vets who are critical of Democrat John Kerry’s actions as a Navy lieutenant in Vietnam in 1968, have diametrically opposed ideologies.

But Soros and the Swift Boat Veterans do have something in common: They have channeled their activism into organizations set up under section 527 of the Internal Revenue Code, called “527” groups in campaign finance vernacular.

According to the non-partisan research group the Center for Responsive Politics, Soros has donated $12.6 million so far to anti-Bush 527 groups.

While all 527 groups can accept unlimited donations from individuals, corporations and labor unions, different 527s do different things: Some broadcast TV ads, others proselytize potential voters or stage concerts to mobilize voter registration.

Under federal law, the 527 groups cannot coordinate their ads with the presidential campaigns. But if they use individual donations, rather than labor union or corporate donations, they can run ads praising or attacking a candidate right up until Election Day.

In theory, 10 donors could each give $5 million to a 527 group for an ad blitz to run in the final week before Nov. 2, as long as the group disclosed to the Federal Election Commission the names of the donors, the amount spent, and the stations or TV networks on which the ads were broadcast within 24 hours of the broadcast.

The FEC’s 24-hour disclosure rule means that it would be difficult to run an ad without revealing who paid for it. An ad could run on Nov. 1, but by Nov. 2 the FEC and the public would know.

The 527 groups existed four years ago, and in fact, one of them, "Citizens for Clean Air," funded by the Wyly brothers of Texas, ran ads criticizing Sen. John McCain, R-Ariz., during the 2000 California Republican primary.

This year, the 527 groups have taken on a more prominent role, and perhaps a decisive one.  So far, the groups have spent a total of more than $200 million, according to the Center for Responsive Politics.

To put this number in perspective, as of June 30, the Kerry campaign had spent $142 million and the Bush campaign, $159 million.

Growth spurred by 2002 law
The growth of these groups was spurred by President Bush and Congress when they enacted the Bipartisan Campaign Reform Act of 2002, also known as BCRA.

The law banned unlimited “soft money” contributions to national political parties, on which the Democrats especially used to rely heavily.

In the heyday of soft money, a donor such as Haim Saban of Mighty Morphin’ Power Rangers fame, could write a $3 million check to the Democrats, sparing them the trouble of getting $3 million from a hundred different donors.

Decrying large donations, Kerry said during the 2002 Senate debate on BCRA, “The American people have become almost numb to these kinds of staggering figures, and they have come to expect fund-raising records to be broken with each election cycle. And, what is far worse for our democracy, is that the public also believes that this money buys access and influence that average citizens don't have.”

The difference this year is that instead of the money going to the Democratic National Committee or Republican National Committee, it is going to non-party groups working for the defeat of Bush, or Kerry, as the case may be.

Bush complained about the influence of the 527 groups in an interview with CNN’s Larry King last week. He seemed under the mistaken impression that BCRA had banned such groups.

Bush calls for ban
“They ought to get rid of all those 527s, independent expenditures that have flooded the airwaves,” Bush said, not explaining whether by “they” he meant Congress or the FEC, which regulates political groups.

“There have been millions of dollars spent. ... I signed a law that I thought would get rid of those (groups),” he added.

Bush said, “I think there ought to be full disclosure” of donors to the 527 groups. In fact, there already is disclosure: Voters can find the names of donors to 527 groups on the IRS web site. Much information about the groups also can be found on MSNBC.com's campaign finance guide, produced by the Center for Responsive Politics.

The FEC is holding a hearing Thursday morning on proposed new limits on 527 groups but any new rules would not take effect before Election Day.

Of the top 10 individual donors to 527 committees, all are backing anti-Bush or Democratic-allied groups. Of the 50 largest groups, 34 of them are allied with the Democrats or anti-Bush.

The top donors include Soros, Peter Lewis, the head of Progressive Insurance, and Andrew and Deborah Rappaport. Andrew Rappaport is a partner in a Menlo Park, Calif., venture capital firm.

The Rappaports each gave $2,000 to the Howard Dean campaign earlier this year, but the clout they have with the 527 committees is much bigger: They have given nearly $3 million to groups such as the New Democrat Network.

On MSNBC’s Hardball last Sunday, host Chris Matthews asked Democratic campaign finance lawyer Robert Bauer whether the 527s were a case of “the same old sort of stinky business where you can find ways to make money count.”

Not putrid 'at all'
“I don’t think it’s a putrid business at all,” Bauer replied. “I think the expenditure of huge sums of money, while it’s often derided in the media and elsewhere, is a mark of people’s commitment to the political process. They’re excited, they want to be involved. They’ll raise, they’ll spend, and I think that’s exactly what ought to happen. I don’t find the total amount of money raised and spent at all shocking, given the stakes.”

But Republican campaign finance lawyer Cleta Mitchell said the 527 groups “are not accountable because they cannot coordinate with candidates or political parties — at least they aren't supposed to but the Democrats' 527s are awfully close, if not over, that line. The objective of the reformers was to stop the influence of big contributions and their impact on elections and access to officeholders, but instead, what we have is no accountability of the groups, no leveling influence that the political parties bring. ... I think that's why the political atmosphere is more and more strident and harsh.”

In what Democrats see as a low blow, the Swift Boat Veterans group has run ads featuring Vietnam vets who accuse Kerry of lying about the military decorations he got in Vietnam.  

The nonpartisan watchdog group Factcheck.org investigated the ad and said, ”The veterans who accuse Kerry are contradicted by Kerry's former crewmen. ...  35 years later and half a world away, we see no way to resolve which of these versions of reality is closer to the truth.”

When King asked if he would condemn the ad, Bush said, “I haven't seen the ad, but what I do condemn is these unregulated, soft-money expenditures by very wealthy people, and they've said some bad things about me.”

Bush also praised Kerry’s military service in Vietnam.

Swift Boat donor
The Swift Boat group is financed partly by Texas Republican donor Bob Perry, who has given to Bush’s 2000 campaign and House Majority Leader Tom Delay’s campaigns, as well as to that of Democratic Rep. Sheila Jackson Lee of Texas.

With more than $600,000 in funds raised, the group is small compared to the Media Fund, which has raised $28 million and run ads assailing Bush, or America Coming Together, which has raised $80 million and is looking to add another $45 million.

ACT has deployed 540 canvassers to mobilize millions of new anti-Bush voters in 15 battleground states. “There has never been anything of this magnitude in terms of voter contact in the history of this country,” ACT president Ellen Malcolm told reporters at the Democratic convention in Boston.

One mystery of the 527 groups is why Republicans have been so laggard in organizing them.
Independent analyst Stuart Rothenberg said last week, “The Democrats got a terrific head start.”

Mitchell provides one explanation. “For some reason, particularly true with this White House team, no one will make a move without a blessing from Karl (Rove) or (Bush campaign manager) Ken (Mehlman) or someone — and there is a specific prohibition on doing these 527s at the suggestion or request or after 'material discussions' with an agent of a candidate or party,” Mitchell said.

“So it's a Catch-22. Republicans want to be asked by the very people for whom it is illegal to do the asking — and there is such an environment of top-down control on the Republican side that it freezes what should be Republican political entrepreneurs," she said.

There is, Mitchell said, "no reticence on the Democratic side. Ellen Malcolm and (her colleagues) Harold Ickes and Steve Rosenthal are seasoned political operatives who don't wait to be asked or need to be told what needs to be done.”