527 Groups

Sens. John McCain (R-AZ) and Russell Feingold (D-WI)

In 2002, Common Cause played a key role in the successful effort to pass the Bipartisan Campaign Reform Act of 2002 (BCRA).  BCRA, which was upheld by the Supreme Court, banned soft money – the huge unlimited donations from corporations, wealth individuals and labor unions – to the national political parties that gave special interests direct influence over key policymakers in Washington.

BCRA has been a success.  But reform groups, and BCRA’s sponsors, Senators John McCain (R-AZ) and Russell Feingold (D-WI), and Reps. Chris Shays (R-CT) and Marty Meehan (D-MA), have been concerned that some of BCRA’s reform gains could be lost if 527 political committees were allowed to operate with no legal constraints.

In the 2004 election, 527 groups influencing federal elections spent an estimated $400 million.  About 25 individuals alone gave $146 million to these groups, some of which were staffed by political operatives who had close ties to the national political parties.  The fear was that 527 groups would be a backdoor route for parties to once again collect soft money, and to evade Federal laws on the books for more than 50 years that have prohibited labor unions and corporations from using their treasury funds to influence federal elections.

For this reason, BCRA’s sponsors in February 2005 introduced carefully drafted legislation, H.R. 513 and S. 271, “The 527 Reform Act of 2005,” that would place some limits on 527 political committees that influenced federal elections.  This bipartisan reform legislation will ensure that 527 abuses will be curbed, and will close a loophole threatening our campaign finance system.  This legislation will ban union and corporate treasury funds from financing 527 groups aiming to influence federal elections, and will also limit the amount of contributions of wealthy individuals to 527s. The legislation, however, would not hinder the legitimate advocacy work of nonprofit groups.

In the Senate on April 27, 2005,  S. 271 was amended in the Senate Rules Committee.  These amendments hurt the bill in significant ways.  As amended, the bill:

• Raises the annual contribution limits to political action committees from $5,000 to $7,500,
• Exempts the Federal Election Commission from regulating any political activity on the Internet, including paid campaign ads,
• Makes it easier for business trade groups to solicit funds earmarked for political donations, and
• Exempts 527 activities that involved partisan voter mobilization from federal regulation.

The reform community does not support the amended version of S. 271.

In the House, H.R. 513, emerged from the House Administration Committee without any amendments. But other dangers have emerged in the House.  Representatives Mike Pence (R-IN) and Albert Wynn (D-MD) have put forth H.R. 1316, a phony “527”reform bill that actually is a way to undermine contribution limits in law since the 1970s.  The bill’s official name is the “527 Fairness Act of 2005,” but it has nothing to do with either fairness or 527s. Rather it proposes to totally rewrite campaign contribution laws on the books for 30 years, and permit, once again, multi-million-dollar donations by individuals to the national political parties.  It would repeal entirely the current aggregate limits on the contributions individuals may give to political parties and federal candidates during a two-year election cycle. Currently, an individual may give $61,400 to all political party committees during a two-year cycle.  Under Pence-Wynn, an individual could give more than $1 million to one party’s political party committee, and double that if the individual were giving to both Democrats and Republicans.

Current law says that an individual may give no more than $40,000 in total in donations to federal candidates each election cycle.  Pence-Wynn would also lift those limits.   So one individual could give the maximum $2,200 per candidate per election to each and every candidate, garnering a total donation to a party’s candidates worth $2 million.

Repealing these contribution limits means that you would once again have Presidents, and Members of Congress, soliciting multi-million-dollar donations for their parties.

Earlier this summer, the House leadership, and House Administration Chair Bob Ney (R-OH) indicated that they would bring Pence-Wynn to the floor.  Common Cause and other reform groups urged citizens to call their representatives and to ask them to strongly oppose Pence-Wynn.  On May 17th, Common Cause along with other reform groups sent a letter to twenty-five Republican Representatives who supported the Bipartisan Campaign Act of 2002. The letter asked these pro-reform members to oppose the Pence-Wynn Bill should it reach the floor of the House. The leadership of the Democratic Party sent a letter to their caucus urging them to oppose the Pence-Wynn Bill.  Our activism seems to have paid off.  In July, House Majority Whip Roy Blunt (R-MO) announced that it was unlikely that Pence-Wynn would come up to the House floor for a vote.  But Blunt said that House leaders were looking at combining Shays-Meehan and Pence-Wynn.

Common Cause and the reform community will fight any efforts to add any provisions from Pence-Wynn to Shays-Meehan.  We are urging House Members to pass a “clean” Shays-Meehan bill without amendment.