The House Rules Committee decided yesterday to allow consideration of legislation permitting what amounts to public financing of small political campaign contributions, a proposal that has split Democratic and reform ranks.
The measure would grant a full tax credit for as much as $100 in annual campaign contributions to House and Senate candidates, and $200 for those filing a joint return.
The credit would apply only for contributions to candidates in the same state as the donor's and not for contributions to political action committees (PACs).
The proposal, to be considered as an amendment to major tax-simplification legislation, is backed by the liberal Democratic Study Group (DSG) but faces intense opposition from Common Cause and Rep. David R. Obey (D-Wis.), a former DSG chairman and leading proponent of campaign reform.
The House Ways and Means Committee rejected the proposal, but the Rules Committee voted to allow it as a floor amendment after the House Democratic Caucus voted, 127 to 41, to support it.
Rep. James L. Oberstar (D-Minn.), current DSG chairman, argued that failure to enact the tax credit "will accelerate the decline in small contributions and make us even more dependent on PAC money."
Rejection of the amendment, he said, "will be seen as a sign that House Democrats . . . are comfortable with the heavy reliance on special-interest money."
Obey, however, said the DSG amendment will benefit the Republican Party and well-organized special-interest groups.
"Can you imagine how much money organized lobbies could raise overnight . . . if the Republican Campaign Committee went to the American Medical Association, the real-estate brokers, to right-to- lifers . . . or other single-issue groups and said, 'We can show you how to contribute $100 to a political candidate and have Uncle Sam foot the bill,' " he asked.
Obey said Democratic constituencies will be far less prone to take advantage of the tax break. "Ask yourself how much luck you would have convincing the average steelworker or machinist or farmer that he could contribute $100 to you" and get it all back from the IRS, he said.
Common Cause opposes the credit in part because it does not include numerous other reforms sought by the organization. Existing law allows a credit of one-half of contributions to $100 or a maximum credit of $50, but the tax-simplification bill would eliminate this.
Ways and Means Committee Republicans voted against the provision, although aides to the GOP House leadership said there is no formal party position on the credit.