Permission to reprint granted by the National Journal.
Most Americans outside Washington, lucky souls, have no idea what a
“527” group is. The country paid no attention last week when the Senate
Rules Committee voted out a bill that would subject 527 groups to some
of the same soft-money restrictions that apply to party committees. The
change was portrayed by many of its advocates as little more than a
technical adjustment to the existing campaign finance rules: “statutory
coordination,” as one expert said in Senate testimony. Asleep yet?
Wake up. This is no mere tweak. The 527 question brings campaign finance
law face to face with a choice it hoped never to have to make. Congress
and the country are on the brink of deciding between unlimited
contributions in politics or unlimited regulation of politics.
The McCain-Feingold campaign finance reform law (officially, the
Bipartisan Campaign Reform Act) was signed into law in March 2002. The
Supreme Court upheld and unleashed it in December 2003, only 18 months
ago. Only one election cycle has passed since then. Yet Congress is
already working on new restrictions. This might reflect, as proponents
of the new restrictions argue, that conditions change rapidly in the
political world. Or it might suggest, as opponents retort, that the law
itself is radically unstable. Unfortunately, both sides are right.
A 527 group is a private, tax-exempt political organization set up under
Section 527 of the U.S. tax code. Such groups have been around for years
but never took center stage until 2004, when they became major players.
As soon as McCain-Feingold shut the door on unlimited contributions
(so-called “soft money”) to political parties, many of the big-dollar
donations began flowing to 527 groups instead. Some of the groups were
established by partisan operatives and acted as virtual proxies for the
parties (mainly the Democrats). Others — notably Swift Boat Veterans
for Truth, which attacked Sen. John Kerry’s Vietnam War record — made
lots of people hopping mad.
According to the Campaign Finance Institute [PDF], contributions to 527
groups more than doubled between 2002 and 2004, to $405 million. Most of
the money came from individuals, often in eye-popping sums; 70 percent
of the total came from just 52 people who gave between $1 million and
$24 million. Democratic zillionaires Peter B. Lewis and George Soros
gave $16 million and $12 million respectively. This was big money if the
phrase means anything at all.
Fred Wertheimer, the president of Democracy 21 (an advocacy group that
says it works “to eliminate the undue influence of big money in American
politics”), argues that 2004 was just the beginning. In 2006, he says,
527 groups will begin pouring money into contested House and Senate
races. “Given the opportunity, this will grow and grow in future
elections, and it will create enormous inequities.” He is probably
right. Absent further change, 527 groups will become the outlet of
choice for unlimited political contributions.
On the other hand, banning soft-money donations to 527 groups would
confirm the campaign finance law’s transformation into an engine of
unlimited political regulation. Imagine a runaway lawnmower munching
every flower bed and hillock in sight, and you have an idea of what the
law is at risk of becoming.
Spending money to buy ads or turn out voters is a form of political
expression. At least until recently, standard legal doctrine held that
such political expression could be restricted only to prevent
“corruption or the appearance of corruption,” as the Supreme Court ruled
in 1976. But what is corruption? It’s easy to see why giving $1 million
directly to a politician or party might smell of bribery or extortion,
but McCain-Feingold put a stop to that. Harder to see is why giving $1
million to an independent group, such as the Sierra Club or the National
Rifle Association, would corrupt anybody. After all, private groups are
in no position to offer legislative favors or shake down constituents.
Ordinarily, one might suppose it to be a good thing when rich people
finance political mobilization and discussion. Where, exactly, is the
harm in George Soros’s giving $12 million to an independent political
outfit that seeks to defeat President Bush? In a recent fact sheet,
Democracy 21 and the Campaign Legal Center reply this way:
“Large donations to 527 groups spending money to influence federal
elections can buy influence with federal candidates, even if the 527
groups are operating independently. Since such 527 groups are spending
money to elect federal candidates, and since the source and amounts of
these unlimited contributions are readily available to the candidates,
the contributions can buy influence with the federal candidates
benefiting from the expenditures by the 527 groups.”
In other words, the problem is not corruption, at least not as
traditionally understood; the problem is influence. In yet other words,
influence is corruption. And in yet other words, because politics is
all about influence, politics is corruption — at least until all
contributions to political causes are so small that politicians won’t
feel particularly grateful to anybody.
It is true that some of the biggest 527 groups in 2004 were partisan
spin-offs; that was a predictable consequence of placing new limits on
parties. But most 527 groups are genuinely independent. The Sierra
Club’s 527 group, for example, raised and spent $6.2 million on
voter-education and get-out-the-vote efforts in 2004. If contributions
were limited, “our guess is our program would probably be reduced by 90
percent,” says Aimee Tavares, the Sierra Club’s political operations
The Sierra Club is one of many nonprofit advocacy groups opposing new
limits on 527 groups. Some, like the Sierra Club, operate their own
527s; many do not understand how restricting political speech and voter
mobilization helps democracy or cleanses politics; and many fear that
once 527 groups are regulated, nonpartisan advocacy groups — the
so-called 501(c)(4) groups that form the backbone of citizen advocacy —
will be the next to face new restrictions.
Public Citizen has already called for a crackdown on 501 groups, saying
in a press release last September, “These new stealth PACs should not be
allowed to operate with such impunity.” Other campaign finance reformers
disagree — for now. “You simply will not see the same kinds of things
happen” with 501 groups as with 527 groups, Wertheimer says. But when
asked whether he would rule out action against 501(c)(4) groups,
Wertheimer said, “I would, based on now. If, down the road, people
concluded there were massive abuses going on, I assume it would be
Many reformers say they are merely trying to prevent circumvention of
the existing campaign finance law, but that is not really reassuring.
“The problem,” says Robert F. Bauer, a Democratic campaign finance
lawyer with the firm of Perkins Coie, “is that once you have become
obsessed with so-called circumvention, with the purity of the reform
effort and anything that appears to threaten it, inevitably you have an
endless law enforcement patrol that fans out over the countryside
looking for fugitives from justice.”
If soft money is blocked from 527 groups, much of it may flow to 501
groups. Once 501s’ funding is restricted, then individuals’ political
activities may be regulated. (If George Soros buys too much influence by
giving $12 million to a political organization, why let him spend the
money himself?) Then the media. (Broadcasts and editorials surely
influence elections.) Untethered to any reasonably circumscribed
definition of corruption, the law is not just on a slippery slope; the
law is a slippery slope.
Here is another plan: Stop. Just stop.
Stop and live with McCain-Feingold for a little while. In law, stability
is an important value in and of itself.
Stop and ponder true campaign finance reform, which one more layer of
legalistic regulation decidedly is not. Interesting proposals include
partial or total deregulation; public financing of campaigns through
government subsidies or personal vouchers; creating a system for
anonymous donations; and hybrids of the above.
Above all, stop and insist that those who want tighter restrictions on
527s tell us: Where do they propose to stop? “I think we have a right
to know at what point people can participate in politics without the FEC
coming after them,” says Bradley A. Smith, a member of the Federal
Election Commission. Question: Can advocates of new restrictions name
even one kind of person, organization, or political activity that they
believe should be unconditionally off-limits to campaign finance
regulators? If they are not required to answer that question now,
chances are they never will be.