Whack-a-Mole: Regulating Campaign Financing is a Tough Game

Where does free speech and campaign finance intersect? How much influence should non-party political groups have in campaigns? How can groups make their opinions heard over the loud buzz of an election?

On April 5, 2006, the House of Representatives narrowly passed a bill that would restrict political groups named after section 527 of the tax code, or, 527s.

The bill would require 527s to comply with the same campaign finance laws that regulate political action committees and parties.

Campaign finance loopholes?

Ever since the Supreme Court upheld the Bipartisan Campaign Reform Act (BCRA) in 2003, watchdog groups have complained to the Federal Election Commission (FEC) that 527 groups are squirming through loopholes in campaign finance law.

Republicans in the House took on the issue, arguing that section 527 organizations are, by tax-code definition, political organizations. Therefore, they argued, these groups need to file as federal political committees, which are subject to contribution limits.

What are the limits?

The Bipartisan Campaign Reform Act of 2002 is long, complex, and took six years to generate. But its two main provisions are the re-regulation of "soft money," and the ban on corporate, union, and special-interest sponsorship of televised campaign ads known as "issue ads" or "attack ads."

Soft money

The term "soft money" refers to large, unregulated contributions to political parties. Under BCRA, soft money donations are limited to $25,000 a year total. 527s have received much larger contributions than that, but since they are not political parties or action committees, the groups are not necessarily subjected to the $25,000 limit.

Issue ads

Watchdog groups argue that 527 ad campaigns directly violate BCRA, even though unions and corporations are not paying for the ads directly.

The 527 group Swift Boat Veterans for Truth ran anti-John Kerry ads that had an enormous impact on the 2004 presidential election, but the ads were not regulated by campaign finance law.

Republicans in the House

Most Republicans in the House agreed that 527 groups should be treated like other political groups, but some Republicans resisted.

Congressman Mike Pence (R-Ind.) disagreed with further limiting campaign financing. He argued that, instead, BCRA regulations should be lifted in order to create a more level playing field.

Pence associates campaign finance with free speech, saying that greater government control of political speech is not the answer. A small group of Republicans agreed with him and voted against the bill. The final vote was 218-209 with almost all Democrats opposing.

Democrats and 527s

Democrats have greatly benefited from 527s. These groups have raised millions for Democratic candidates; and although Republican 527s are catching up, Republicans running for office haven’t seen as many 527 dollars.

Democrats in both the House and Senate are opposed to limiting 527s, and like Pence, they say limiting these groups would limit political speech.

The bill will face a tough battle in the Senate.

Meat and potatoes of the matter

At issue is the permeability of campaign finance law. How diligent must government be to ensure that campaign financing is fair and protects free speech but does not undermine the voting power of the average American? How can reforms be made comprehensive, so as to protect from corruption, but flexible, so as not to inhibit the political process?

The Federal Election Commission (FEC) would probably have to adopt new rules in order to explicitly include section 527 groups in BCRA, thereby defining when spending becomes federal election activity and when donation limits must be enforced.

Another way to regulate

In late March 2006, a U.S. district judge ordered the FEC to reconsider 527s. More specifically, Judge Emmet G. Sullivan told the commission to better explain why it has refused to regulate 527s; courts could eventually force the FEC to regulate them.

What do you think?

Campaign finance analysts complain that money is like water - it will always seep through. And more recently Congressman Pence likened campaign donations to the whack-a-mole game, in which the mischievous mole always pops up somewhere new.

So if large campaign donations will get through sooner or later, how should regulations adapt? What kind of laws could keep campaigns fair? Is it a conflict of interest for Congress to make its own campaign finance laws?

Your input matters

Your representatives in Congress DO care what you think. Especially now -- 2006 is an election year and many representatives will be looking to reconnect with their constituents. Let your congressmen and women know what you think! Give your senators a piece of your mind! To find your reps, click here.

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Article Posted on: 4/9/2006