FEC Adopts Hands-Off Stance on '527' Spending

By Thomas B. Edsall
Washington Post Staff Writer
Thursday, June 1, 2006

The same rules that allowed independent "527" groups such as America Coming Together and Swift Boat Veterans for Truth to pump more than $400 million into the 2004 election campaigns will remain in place for now, the Federal Election Commission announced yesterday, a decision that invites even larger sums to be spent influencing races this year and in 2008.

The FEC ruling, made on a vote of 4 to 2 in closed session was a response to an order by U.S. District Judge Emmett G. Sullivan. Noting the apparent "complete failure" of the FEC's regulatory efforts in 2004, Sullivan required the agency either to start crafting new rules or to issue a better explanation of how it will be able to regulate the groups effectively under existing rules.

Commission Chairman Michael E. Toner was one of the two dissenting votes. "The stage is set for 527s to once again spend hundreds of millions of dollars in soft money to influence the 2006 midterms and the 2008 presidential election," he said.

Money donated to 527 groups -- the name comes from the section of the federal tax code under which the organizations operate -- must be disclosed under election law. Unlike contributions to candidates or major parties, there are no limits on what an individual can give.

In the 2004 presidential campaign, this allowed donors such as financier George Soros and insurance magnate Peter Lewis to be the major supporters of the liberal groups America Coming Together (ACT) and the Media Fund, which organized field operations and bought television ads against President Bush in swing states such as Ohio. On the other side, Texas developer Bob J. Perry helped fund the Swift Boat Veterans, which attacked Democratic nominee John F. Kerry's Vietnam War record.

Committees aligned with the Democratic Party outspent their GOP competitors $320 million to $109 million, according to the Campaign Finance Institute.

House Republicans have passed legislation to limit the money individuals donate to 527 groups to $25,000 for voter registration and turnout activities and to $5,000 for TV commercials. Senate Democrats, however, appear determined to block the measure.

Toner said he sought to write a rule severely restricting contributions to 527 groups, but lost the vote yesterday. He was joined by fellow Republican Hans A. von Spakovsky. All three Democrats on the commission -- Robert D. Lenhard, Ellen L. Weintraub and Steven T. Walther -- joined Republican David M. Mason in the majority vote.

The pro-Democratic tilt of 527 spending in 2003-2004 prompted opposition at the Republican National Committee, the Bush-Cheney campaign and among Republican members of the House and Senate. Republicans did not become actively involved in 527 fundraising until May 13, 2004, when the FEC rejected proposals to issue strong regulations governing contributions to the groups.

The 527 activity in 2004 may not recur. Since the 2004 contest, ACT and the Media Fund effectively folded when Soros and some other Democratic heavy hitters withdrew support.

Reps. Christopher Shays (R-Conn.) and Martin T. Meehan (D-Mass.), co-sponsors of the 2002 McCain-Feingold campaign finance law, had sued the FEC demanding tougher regulations and enforcement.

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