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'527' Legislation Would Affect Democrats More

Billionaire investor George Soros and other wealthy individuals, on both sides of the political divide, have given millions to non-party, tax-exempt
Billionaire investor George Soros and other wealthy individuals, on both sides of the political divide, have given millions to non-party, tax-exempt "527" groups. (By Munshi Ahmed -- Bloomberg News)

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By Thomas B. Edsall
Washington Post Staff Writer
Tuesday, March 28, 2006

In 2001, when Karl Rove first outlined plans for a $50 million get-out-the-vote program, his PowerPoint presentation made one point clear: The effort would be a "joint project of the White House and the Republican National Committee."

Rove's declaration points to a crucial difference between the Republican and Democratic parties. Less than a year later, top Democratic strategists began moving in precisely the opposite direction. During the Bush years, voter mobilization in large measure has been run by what analysts call a "shadow Democratic Party" -- consisting of outside groups operating independently from the Democratic National Committee and the party's top office seekers.

The difference between the two approaches explains why the Democrats are a lot more worried about proposals to impose sharp limits on spending by tax-exempt, non-party political groups.

Sen. John McCain (R-Ariz.) is sponsoring legislation that would restrict donors to giving just $5,000 annually to "527" groups (named after the section of the tax code they operate under). In recent years, tycoons such as George Soros and T. Boone Pickens have given millions to such groups.

"For better or worse, our side is now much more reliant on extra-party institutions to do our core political business," said Jim Jordan, who in 2004 helped coordinate the activities of two independent, liberal 527s, the Media Fund and America Coming Together.

"There are two political cultures, each with their own economies," said one top strategist, a veteran of many Democratic presidential campaigns. "We would try to tell the groups working with us what we wanted them to do, and sometimes they paid attention -- and when they disagreed, they did whatever they wanted to do. It's very different on the Republican side of the aisle."

Over the past 30 years, the Republican National Committee has centralized control and funding of such basic political functions as voter mobilization and message development.

The RNC contracts out work to consultants who operate under strict oversight. Those who fall out of favor face being cut off from party-generated work. Independent groups, such as the Club for Growth, are viewed by the party establishment as disruptive, encouraging conservative primary challenges to moderate incumbents as much as contributing to the defeat of Democrats.

Democrats, by contrast, tend to view the independent groups with gratitude rather than resentment -- because they are doing essential political work that is not being done by others.

In 2002, the legislation commonly known as McCain-Feingold imposed a ban on "soft money" -- large, party-raised contributions on which Democrats, more than Republicans, had become heavily dependent. This led to a blossoming of 527 groups, orchestrated by such veteran liberal operatives as Harold Ickes, an aide to President Bill Clinton; Ellen Malcolm of the feminist group Emily's List; and labor organizer Steve Rosenthal; and funded by such people as Soros and insurance millionaire Peter Lewis.

More recently, wealthy liberals, working independently from the Democratic Party, in 2005 formed the Democracy Alliance with the goal of building a strengthened Democratic infrastructure of think tanks, advocacy organizations and leadership training groups. Ickes, in turn, is starting a private, for-profit company to create a national voter list.

Republicans have not outsourced political functions because the GOP can afford to finance -- and therefore control -- these activities.

Just last year, the RNC raised $105.4 million compared with $56.1 taken in by the DNC. In the competition for small donors, the RNC raised $55 million in gifts under $200, while the DNC raised $32.2 million in under-$200 contributions.

These two disparate approaches to building election treasures and machinery underpin Democratic opposition to and Republican support for enactment of tough, new restrictions on the independent 527 committees. In the first election in recent memory in which Democrats raised nearly as much as Republicans, the 527s flooded the 2003-04 election cycle with $424.8 million. The money favored pro-Democratic groups, which outspent their pro-Republican adversaries 2 to 1, or by $110 million.

Republican National Committee Chairman Ken Mehlman is outspoken in support of the proposed new rules on independent groups, declaring that Republicans "must reform 527s, so that everyone plays at the same level, and billionaires can't once again use loopholes to try to buy elections."

But this view has angered some conservatives, who say that GOP leaders have allowed political self-interest to trump their commitment to the free market.

Former Federal Election Commission member Bradley Smith wrote on the RedState blog that restricting 527 political committees runs counter to conservative principles and would prevent such key pro-Republican groups as the Swift Boat Veterans and Progress for America from replicating in future elections the crucial role they played in 2004. While outspent, PFA and the Swift Boat Veterans ran ads that Democrats and Republicans agree were the most effective of the campaign.

"We're so hung up on Soros, we're not only betraying principles, freedom and good government, but we're being politically stupid. Soros spent $25 million in 2004, and as the guys at National Review put it, all he got was a T-Shirt," Smith wrote. "527 'reform' doesn't whack big labor, big liberal foundations, big Main Stream Media. . . . It does 'cut off' Swift Boat Veterans for Truth, Progress for America, and Club for Growth."

Smith and Democratic FEC member Ellen L. Weintraub, among others, believe that clamping down on 527 organizations will merely result in a massive transfer of resources to other nonprofit, tax-exempt groups.

If this prediction came true, the result might mean less public disclosure -- the opposite goal of most political reformers. That is because 527 groups must reveal information about contributors and spending, while other entities, such as 501c groups, do not.

Meanwhile, there are signs that Republicans increasingly are borrowing some of the political outsourcing techniques of Democrats. On Nov. 26, 2005, television ads began to run in Pennsylvania that were designed to directly address one of the dangers facing the reelection campaign of Sen. Rick Santorum (R): a potential backlash among the state's elderly because of Santorum's support for private investment accounts under Social Security.

Onscreen, an older man holds his grandson's hand as the two walk along a sunny park path. The announcer tells viewers:

"These days, Edgar's afternoons are reserved for grandkids. . . . He's enjoying retirement because Rick Santorum is protecting his Social Security. Santorum sponsored legislation guaranteeing Americans 55 and older the Social Security they deserve."

The ads, part of a $1 million buy, did not cost the Santorum campaign a dime. Americans for Job Security, a tax-exempt, nonprofit organization financed them. Michael D. Dubke, president of the 501c6 that in 2004 raised $7 million, declined to disclose the names of AJS donors. He said identifying them would simply detract attention from the group's free-market message.


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