The Federal Election Commission yesterday adopted new regulations that will make it significantly more difficult for independent political groups to continue to raise and spend millions of dollars in contributions after the 2004 election.
The new rules become effective Jan. 1 and will not limit this year's explosion of spending by nonparty groups such as America Coming Together and the Media Fund, which are closely aligned with the Democrats, and Progress for America on the Republican side.
For Lobbyists, Big Spending Means Big Presence (The Washington Post, Jul 28, 2004)
Political Gifts for Host City (The Washington Post, Jul 8, 2004)
Republicans Name 62 Who Raised Big Money (The Washington Post, Jul 1, 2004)
Republican 'Soft Money' Groups Find Business Reluctant to Give (The Washington Post, Jun 8, 2004)
Soft-Money Group Promotes Ties to GOP Leaders Despite Warnings (The Washington Post, May 30, 2004)
"We have done something huge," said Ellen L. Weintraub, the Democratic vice chairman of the FEC, after the 4 to 2 vote. Scott E. Thomas, a Democratic commissioner and strong advocate of tough regulation, dismissed the regulations as "tinkering" that "will prove inadequate." Weintraub countered: "It isn't tinkering. It's a big deal."
The FEC adopted two major regulations.
The first involves fundraising solicitations. If an appeal to a prospective donor "indicates that any portion of the funds" will be used to support or oppose a federal candidate, then the maximum that can be contributed would be $5,000. Currently, groups that refer specifically to President Bush and John F. Kerry are raising contributions that in some cases exceed $10 million. A group raising money for both federal and nonfederal candidates must raise at least half of its funds in amounts of $5,000 or less, according to the new rules.
The second rule governs the way the groups collect both "soft money," defined as unlimited donations from corporation, unions and wealthy individuals, and "hard money," defined as limited donations from individuals.
Under current rules, ACT, for example, has financed much of its work using 98 percent soft money and 2 percent hard money. As of 2005, at least half the financing would have to be done with smaller, hard money contributions.
If these rules had been in effect for the current election cycle, they probably would have crippled such groups as ACT and the Media Fund, both of which got off the ground with multimillion-dollar donations from wealthy liberals determined to defeat Bush.
Republicans, confident in the fundraising ability of Bush and the Republican National Committee, initially failed to compete with Democrats in raising money from these nonparty groups. More recently, they have begun a major drive to match the Democrats, who have outraised them.
It is not clear whether the nonparty groups, known as "527s" for a section of the tax code, will be able to adjust fundraising and spending practices to accommodate the new guidelines.
Jim Jordan, spokesman for ACT and the Media Fund, said both groups "have maintained all along that should the courts, the FEC or Congress change the rules that govern 527s sometime in the future, we will cheerfully and conscientiously abide by those new rules."
The Media Fund has already played a crucial role in the 2004 election. In March and early April, it financed anti-Bush television ads when Kerry could not afford to. ACT, in turn, has led the way in building voter mobilization organizations in all battleground states.
Thomas and other critics of the new rules contended that 527 organizers will redesign solicitations to avoid explicit mention of support of or opposition to a federal candidate to avoid getting ensnared in the regulations.
Weintraub and Republican Commission Chairman Bradley A. Smith countered that one of the basic functions of the law is to get people "to modify their behavior."
"If you think you can get rid of the influence of money in politics, it's hopeless," Smith said. If, however, the goal is to reduce the likelihood of the corrupting influence of money, "what we have done is hopeful."
The 527s blossomed after passage of the McCain-Feingold campaign finance law in 2002. The measure barred the political parties from accepting soft money.
Democratic operatives, fearful that their party and its candidates would be devastated if they had to rely on hard money contributions, immediately stepped in to create ACT, the Media Fund, America Votes and a host of others. All readily accepted soft money over the bitter objections of campaign watchdog groups and GOP officials.
Last May, the FEC rejected pressure to issue tough regulations governing the 527s for the current campaign, contending that it would be unfair to intervene in the midst of a presidential election year.
These groups have accepted huge donations from liberals and conservatives, including $14 million from insurance executive Peter B. Lewis, $12.7 million from financier George Soros, and $1 million from Univision head A. Jerrold Perenchio.