CAMPAIGN FINANCE INSTITUTE

CAMPAIGN FINANCE REFORM FORUM

FRIDAY, JANUARY 14, 2005

NATIONAL PRESS CLUB WASHINGTON, D.C.

PANEL TWO

PARTICIPANTS:

ELLEN MALCOLM, FOUNDER AND PRESIDENT, EMILY’S LIST MICHAEL J. MALBIN, EXECUTIVE DIRECTOR, CAMPAIGN FINANCE INSTITUTE STEPHEN WEISSMAN, ASSOCIATE DIRECTOR, CAMPAIGN FINANCE INSTITUTE, POLICY MIKE RUSSELL SENIOR VICE PRESIDENT, CREATIVE RESPONSE CONCEPTS

Transcript by: Federal News Service Washington, D.C.

MICHAEL MALBIN: Please take your seats again. The second panel today will be about the effects of BCRA on interest groups and advocacy organizations. That section of the book will include a chapter by Clyde Wilcox from Georgetown University that will trace former soft money donors to see whether their funds have reentered the system. And just to let you know -- because this relates to a comment that was made during the past session -- the data have not been completely analyzed but seem to be showing that many of the soft money donors did not participate this time. We’ll report those complete results as they become available.

Other chapters will look at the effects of BCRA on ongoing interest groups and advocacy organizations, which can operate politically through a large number of forms. For example, they can form a federal political action committee, or PAC; they can encourage members to contribute as individuals to candidates; they can contribute money from their corporate treasuries to a political party’s – they can still contribute money from the treasury to a political party’s convention committee or to an inaugural committee; they can contribute to a nonprofit issue advocacy organization or trade association that, for tax buffs, would be one that is organized under 501(c)(4), (5), or (6) under the Internal Revenue Code, or they can support a kind of political committee that has become known as a 527 committee, named after that section of the Internal Revenue Code for political committees.

Now, the 527 section of the Internal Revenue Code governs all political committees including candidate committees and political action committees, but of course when we speak about that in the common parlance, we are referring to ones that are "other" committees: a non-party, non-candidate, non-political action committee. These are ones that received the most publicity during this election season.

As you know, or as many of you know, the Federal Election Commission has been considering how to regulate 527 committees, and its approach has provoked controversy. There is also a proposal before Congress to regulate the 527 committees more rigorously than the FEC has done so far. The paper we are about to hear by Steve Weissman and Ruth Hassan is not about the details of the proposed regulations; it’s not about precisely how these things ought to be regulated. And in fact, the Campaign Finance Institute did not testify on that question and has not taken a position on those kinds of questions. Rather what the paper does is to take a close look not at the legal disputes but at the realities of 527 fundraising in 2004 to see how these have changed since 2002. The point is to add a crucial empirical dimension to any future discussions about policy.

The paper will be presented by Steve Weissman. Steve is the associate director for policy at the Campaign Finance Institute. Before arriving at the institute he was a legislative representative for Public Citizen’s Congress Watch, specializing in campaign finance reform. And he is also the author of a book, “A Culture of Deference: Congress’s Failure of Leadership in Foreign Policy” that grows out of his work both as a person who taught political science before he came to Capitol Hill and had a long career on Capitol Hill in international relations committees.

Our co-author, Ruth Hassan is also here today. Ruth is a graduate student [at George Washington University] and a research assistant at CFI.

Steve will be followed by Ellen Malcolm, who is on my right, who is the president of America Coming Together, which ran a national voter mobilization campaign. She is one of the founders of the Joint Victory Campaign, which raised money for ACT and for the Media Fund. She is best known, or perhaps after this year equally- known but before that best-known, as the founder and president of EMILY’s List, which stands for Early Money is Like Yeast. That’s a political network for pro-choice Democratic women that raises early money for women Democratic candidates.

She will be followed by Mike Russell. Mike is the senior vice president of Creative Response Concepts, which is a public relations firm. He manages both corporate and political clients and developed strategies on earned media campaigns for such organizations as the Swift Boat Veterans for Truth, Progress for America, and the Pharmaceutical Researchers and Manufacturers Association, or Pharma. Prior to joining Creative Response, he was communication director of the National Republican Senatorial Committee and then before that was a journalist.

And so we’ll start with Steve Weissman.

STEVE WEISSMAN: Thank you, Michael.

As Michael indicated, there is a large political controversy about what to do about the section 527 groups. In principle, you have really two sides to the issue. The first side says, look, these groups are a way to get around the soft money ban of BCRA; they are a way that people are corralling large contributions, and this is going to corrupt politics again; we have to regulate them. On the other hand, many people say, look, these 527s are not regulated tightly because they are not giving any money to candidates; they are just spending on their own. And this really enriches the public debate if, as some – as one tax attorney once said, causes can have angels. Well, we have rich people helping enrich the debate on both sides. And what I’m hoping to do here, in giving you the results of our studies, is to give you some real-world analysis that might help refine that debate – refine those questions so that we can apply those principles to practical reality.

In brief, let me just throw at you the conclusions of this analysis and then I’ll go over them in detail. We found through a painstaking examination of 527s active in federal elections that most of the soft money banned by BCRA was not replaced by 527 money in 2004.

We found that there are two different kinds of 527s. One kind, represented very well by EMILY’s List, for example, or the National Association of Realtors, has been active over the cycles since there were 527s, which is not very long but they were active in 2002 and 2004. They tend to have a different character than some of the groups that – and I’ll explain that – that came out in 2004 only.

With regard to the issue that was raised in the last panel about the relationship of parties to 527s, we found that existed with a group of 527s – a very large group of 527s, but we didn’t find illegal coordination with the parties. Nothing illegal was done; no laws were broken. But we did find that the parties, through their leading paid consultants, through former President Clinton, through official statements and winks and nods by the campaigns – by the parties and the Bush campaign, that they facilitated not only the creation in some respects, but the fundraising of the 527s. This is something I’ll also go into.

In terms of who is giving the money to these 527s, we found that unions are more important than a lot of people have considered, but that individuals provided most of the money for the 527s and the business community was very recalcitrant.

Finally, in terms of the donors to the 527s, we found that the thing that is most striking in 2004 is that the 527s benefited from the willingness of donors to give more across the board, whether it was labor, whether it was business, whether it was individual people, who just are not George Soros, who gave $24 million, but someone who gave $100,000. The number of people who gave $100,000 to a 527 went from 66 in 2002 to 265 in 2004. And so the donors have changed, and I’ll lay that out a little more.

Finally, one question that has intrigued people is, well, are these the soft money donors -- even as individuals, even if it’s not companies -- that are turning now and saying, okay, we can’t give to parties; let’s give to 527 organizations because we can give as much as we want to such groups? And we found that while it’s true that most of the large donors in 2004 and even in 2002 were party soft money donors, the striking thing is how they, like everybody else – they were willing to give so much more to the 527s in 2004 than they ever gave to political parties. In fact, the 73 former soft money donors in 2004 who helped provide $157 million to the 527s had given only $50 million to the parties. If you combined what they gave parties in 2000, what they gave in 2002, and if you threw in the few million they gave to the 527s in 2002, altogether there is only something like one-third of what they were willing to part with in 2004 for 527s.

So what you’re looking at here is, to the extent that there has been any transfer of money, you’re also looking at the fact that these donors got a lot more willing to give big bucks in 2004 than they had ever been before. And I think, by the way, that – I hope I have time to explain all of these points because I’m taking so long in outlining them – but I think what we will see as a result of this is the possibility that even though the 527s have not replaced all the soft money in 2004, that that is a kind of a myth that has been going around. Nonetheless, there is a great potential for the 527s to continue to take off, the fact that they were able to get so much more money out of these former soft money donors than they had ever given to the parties, the fact that they have really just scratched the surface because there are a lot more former soft money donors out there who are willing, perhaps under other circumstances or as things become institutionalized, to give a lot more money. So the 527s could be a larger issue in 2006 and ’08.

Let me just elaborate a little bit on each of these points and take it from there. We have some tables, by the way, as I talk, that are in your packet. So you can follow them either on the screen or close up.

First, let me say that it is a real job to figure out who are the 527s you are talking about. Some of them are state-politics oriented, some of them are federal-politics oriented, some of them are kind of mixed, like some of the trade unions, which are very important, are mixed. They are doing both federal and state. Some groups have kind of said, well, this is too difficult to deal with; we’re going to not include them. But we didn’t think that. We felt that if the trade union was either primarily involved with federal elections or if it was – if we could track the expenditures of at least a third of their money, not to speak of administrative costs, not to speak of money that might be partly used for federal - but if we could track at least a third of that money went for federal election activities, we kept them in our group.

So we have the latest figures. They’re not absolutely final as the final reports aren’t in, but they cover the election period, and according to those latest figures – we need the first table, Brendan; the first thing. According to those figures you’ve got in your packet, there was approximately $556 million in soft money before BCRA. (We’ll get there.) And the $556 million was composed of money given to the national political parties, and also includes estimates we have for the state soft money that was reported to be spent on federal elections. Before BCRA there was $556 million.

Now, 527s existed already before BCRA was ever adopted, so we looked at how much did they increase after BCRA? They actually went from $151 million to $405 million. So they went up $254 million. That leaves $302 million of soft money that they didn’t replace. So right now anybody who says all these 527s just replaced all the soft money, that’s not accurate.

The different kinds of 527s I mentioned before, you’ve got groups like EMILY’s List or the Realtors or Club for Growth or the Sierra Club, and they’re the kind of ones that were active in both cycles, ’02 and ’04. They’re stable groups, kind of rooted. They have PACs, most of them. That means they’re asking people to contribute to politics, hard money, regulated money. Some of them – many of them have (c)(3) and (c)(4) groups, members, and these groups are often interest groups or factions of parties who often disagree with party leadership. These groups actually provide $150 million of the $405 million in this election.

Often when we look at America Coming Together and we look at the Media Fund and we look at Progress for America and Swift Boat Vets POWs for Truth, we’re taking our eye away from the stable – often with PACs –and that doesn’t mean that a first-time group like America Coming Together or Progress for America can’t develop into a longer-lasting group with a longer-lasting constituency, but most of the groups that were active in ’04, the 250 other million, these were groups that were transient in a way. They had just been organized; they represent something that is less substantial in many ways.

Now, what about the parties and the 527s? We based our analysis, which is in our draft paper, on both press sources and some confidential interviews we did with people knowledgeable about the 527s, and we concluded that in the case of a little under half of the money that was spent in 2004, the parties were complicit and were perceived as complicit by donors and others in not only the creation but often the development and facilitation and fundraising especially of the 527s. And we know from the press and others, the history of the task force that the Democratic Party formed, with Harold Ickes as a spearhead, that was looking at what could be done about BCRA before BCRA actually went into effect, leading to the creation of the Media Fund or the conception of the Media Fund and of Grassroots Democrats to help state parties.

But what seems to have also happened, first on the Democratic side, is that interest groups that already were trying to organize for the election, and they were meeting, were joined in by Ickes, who was obviously at that point, even though he was not formally anymore working on campaign finance matters for the Democratic National Committee, was a paid consultant and leading advisor to the DNC, and his job was advisor to DNC chairman Terry McAuliffe and to really give him all the kind of advice he wanted.

And as a leading consultant, Harold Ickes was involved in the talks, which were initiated by others and mainly dominated, I would say, by others in the establishment of America Coming Together and America Votes.

But I think the most interesting thing in many ways about this is the fundraising, because what happened was there was a feeling, well, how as an independent group can we establish ourselves with funders? Now, one route was George Soros, who got interested in it, and George Soros actually got a couple of consultants who were recommended by another Democratic high-level person, John Podesta, to evaluate the plans and influence the plans in a more grassroots direction – a broader direction, not a more grassroots direction, to do more states. But what was very important was that they felt to get credibility they needed to bring in Bill Clinton. Bill Clinton will tell people this is the strategy; this is where you should put your money.

So they got a dinner together at George Soros’s house with about 15 donors, and Bill Clinton basically made the appeal to those donors. Basically the communication was, as one person said: “I know them; you can trust them; this is the strategy.” One of the people who was involved said, “He koshered us; he gave the donors confidence, both ideological ones and the access ones.” Clinton also did a fundraiser for about a dozen, as I recall, donors in Los Angeles that Harold Ickes organized for the Media Fund later on.

So basically you have, in the fundraising, a strong presence of the party leadership: Harold Ickes, who remains a consultant with the Democratic Party up through December of 2003; Bill Clinton brought in as a kind of a party notable, the perception being we need to be certified and so forth. And basically the message to many donors by some fundraisers was, “we don’t talk to the campaigns, are not connected with them, but they know and appreciate us and contributions are part of the public record and they are aware.” And that’s a quote.

Now, on the Republican side you had a group called Progress for America, and Progress for America was similarly developed. It was started as a kind of – by the political director – former political director of the Bush campaign -- as a group supporting the Bush administration’s policies. But as BCRA came into effect, the notion was we’ve got to make this more of a campaign organization. And what happened was that there was, again, a consultant involved to the Republican National Committee named Tom Synhorst, who is the partner in a group that had set up Progress for America, called FLS-DCI. And Synhorst was also a partner in another group called DCI Group, and what they did basically was they ran Progress for America out of DCI Group.

So FLS-DCI has the contracts with the Republican National Committee and the Bush campaign that eventually produced $19 million for their company, and then the common partner was a strategist and fundraiser for Progress for America working out of DCI Group. So he was the partner both in FLS-DCI, which had the contracts, and the DCI Group, which ran Progress for America, and the president of Progress for America was a partner also at the DCI Group.

So what was important about the Republican sort of trend, though, was that the group was first started out saying, let’s see if we can do this not as a 527 but as a (c)(4); they had some problems and they were hoping the FEC would get rid of the largely Democratic-orientated 527s, and they’d figure it out as a (c)(4) – as an advocacy group. Well, the FEC didn’t do what they wanted and therefore they became a 527. And when they became a 527, basically the RNC issued a statement [with the Bush Campaign] that was interpreted by everybody as certifying, that’s the place to put your money. The statement was very carefully phrased to be within the law. It said, the FEC in action has given, quote, “given the green light to all non-federal 527s to forge full steam ahead in their efforts to affect the outcome of this year’s federal elections, and in particular the presidential race.” Then it said, “The 2004 elections will now be a free-for-all. Groups like Leadership Forum, Progress for America, the Republican Governors Association and GOPAC and others now know they can legally engage in the same way Democratic- leaning groups like ACT, the Media Fund, MoveOn and Moving America Forward have been engaging.”

Well, only one of those four Republican-leaning groups that was active in the presidential election and that was Progress for America. And as I quote a leading strategist in the paper, who knew about this, regarding Progress for America, quote, “If we weren’t on the list, it would have been over. Our message had been, we don’t like 527s, and the Republican Party and campaign said, don’t fight them anymore. From there it was all up. We didn’t have a Clinton to encourage donors like the Democrats had.”

Let me then quickly just run over the last couple of tables before concluding. Between 2002 – before BCRA -- and 2004 after BCRA – you see business didn’t do anything for the 527s. In fact, business money went down from like $30 million – $32 to $30 million. In fact, there was one phony company in there so it’s probably $32 to $26million. Labor unions went up from $57 million to $112 million. Three unions gave 84 percent of the money, and the labor unions really put a lot of money into 527s. They put five times as much as Soros put in. Individuals, though, that’s the big growth area, from $37 to $256, I believe, million.

But looking at the donor themselves and the point I made earlier – look at these two charts. The blue is 2002 and the purple is 2004. In 2002 half the money is coming in $5,000 to $100,000 contributions. In 2004, 12 percent of the money is coming in that way. But look what’s coming in in 2004: 56 percent of the money is coming in at $2 million and over whereas it was nothing like that in 2002. Obviously people are giving a lot more. You can see all these columns on the right; they’re kind of higher. More people are giving more – bigger donations in 2004 than in 2002. In 2002, even though $5,000 to $100,000 is a lot of money, obviously they’re giving less, these donors, and that’s where, as I mentioned, you go from 66 donors at $100,000 and over in 2002 to 265 in 2004.

And let’s get that last chart, which – all right; this gives you all the detail you’ll ever want about who the donors were in 2002 and 2004, and the first biggest says, okay, there’s 24 people who gave 56 percent of the money in 2004. In fact, let’s add all those guys up: 113 people gave over $250,000. All right, then you add on the other 152 who gave over $100,000 and you really have accounted, in that respect, for 88 percent of all the money. So very different from the figures you see over there.

Now, one thing we should keep in mind because of the press coverage – the press coverage said, okay, these two-dozen people that took over the whole thing, that’s the 527s. But 44 percent of the money came from people who didn’t give $2 million; they gave between $5,000 and $2 million. That money they gave was three times all that individuals gave in 2002. So even if all of the $2 million and over donors disappeared, the ones who brought the total amount of individual money seven times that of 2002, still you would have three times the amount of money as 2002.

So what we see here is kind of, across the board at the higher levels, more and more giving by people, more and more willing to give higher amounts.

And finally, with the soft money donors, of the 113 people you see here we basically had 73 former soft money donors. And as I mentioned, they had given $50 million to the parties; they gave $157 million to the 527s – $50 million to the parties over more two cycles, 2000 and 2002. So we simply don’t have a transfer only; we have a greater willingness to give.

And really, to conclude – I know I’ve been promising to conclude, but to actually conclude, the future is obviously impossible or hazardous to predict in politics. Nobody really knows what’s going to happen, and we’ve had some cautions on that this morning about whether the passions will continue in the post-presidential election. But it seems to me that the genie is out of the bottle. People are giving bigger and bigger amounts of money. In the past, with soft money, once they got to a certain level they didn’t go back and say, okay, I’m only going to give $100,000 or $50,000 this year.

So I think there is a very good chance that this level will continue. And, you know, we’ve had not only with the 527s but we have done an analysis of the presidential nominating convention donations; people were giving $5 million to the conventions. It was unheard of for individuals to give $5 million. These are some of the same people who gave the money to the 527s.

So we have a precedent. Business didn’t want to get into this. They were reluctant to be leaned on. There is a loose connection to the party, looser than actually if a party asks you to contribute, and many of the 527s don’t have any connection with a party. But I wonder, if the 527s become regularized and legal and institutionalized, whether a lot of these businesses may decide, maybe we should – now that it looks like this one or that one is the Republican one or the Democratic one, maybe we should be involved. And if that happens and if they begin to approach all the other former soft money donors or all the other rich people that might be around that the parties have never found, I think the question we are all asking here will recur: what did BCRA accomplish? I think that question will be asked and it’s something that should at least inform the debate that we’re going to have on the 527s.

MR. MALBIN: Before calling in the commentators, I want to say two things. One is, in Steve’s presentation he mentioned some early strategic meetings of the Democratic Task Force on BCRA and he didn’t say, but it is in the paper, that the meetings he is referring to (or some of them) occurred before the election of 2002; that is to say, before BCRA was in effect. So that was the point about the legality as opposed to the policy issue. Second, he said that this is all the information you’ll ever want to know. No. If you read the paper, there is an appendix and all the donors are listed by name. That is all the information you want to know. (Laughter.)

All right, we now ask Ellen Malcolm to speak. She is the president of ACT.

ELLEN MALCOLM: Thank you, Michael, very much.

I think one of the things when we look at the influence of BCRA and what happened with the fundraising in this election is – and I wasn’t at the earlier panel but I think others have made this point – you cannot underestimate the energy, the political energy of people about this election. The polarization that took place between the Democrats and John Kerry and Bush and the Republicans resulted in an incredible outpouring of support for their candidates on either side.

And in fact, one of the things that I think would be very interesting was to look at what happened with small donors in this election because they certainly came out and supported both the party and candidates and organizations like ACT and EMILY’s List in ways that I’ve never seen before. And if there is one thing going into this election I underestimated, it was the impact of people who were going to write those small contributions, either through the mail or on the Internet or at events, over and over and over again, creating a phenomenal amount of money on our side for both the Kerry campaign and the Democratic National Committee.

ACT and EMILY’s List are both political action committees. And I think it is a very important distinction to understand what that means in terms of our use of both federal hard money and non-federal soft money. There is a lot of conversation and a lot of analysis here about the soft money piece of the equation. But ACT ended up raising about $33 million in federal money – in hard money; a very significant amount of money, and a very significant amount money that enabled us to conduct our program.

EMILY’s List similarly raised $27 million in hard money, and as a political action committee we are paying our bills and doing our work with a combination of hard money and soft money, and so I don’t think it is a good idea to leave off or out of the equation this federal money that is very much a part of what we are doing.

The energy came out in this election not just in the amount of money. And one of the things that also was amazing and I think very exciting about our democracy was the participation of people in this election. Certainly voting turnout went up but we also had tens of thousands of volunteers who went out and talked to voters and knocked on doors and made phone calls and tried to get people to go and vote. EMILY’s List itself is an example. In Palm Beach County, which was our responsibility there for the America Votes Coalition, we had 1,200 volunteers on the ground in the final four days, knocking on doors and making sure we could get the vote out. I have never seen anything like the outpouring of volunteer energy as we saw in this campaign.

And clearly, as Stephen said, the large donors were also motivated. Some of them were party donors; some of them were very motivated at winning the presidential election, as George Soros certainly was and has said publicly; some of them – and you can see this and I think it’s a bit of an explanation for why there were these new big donors – weren’t all that happy with party politics, weren’t all that happy with the program for the party. They were very excited about what ACT was doing, what EMILY’s List was doing in talking to voters. We talked a lot – I talked a lot on the road about the importance of investing long term in building an infrastructure that can talk to voters and bring them to the polls. We explained in great detail to prospective donors what we were going to do with their money, which is certainly a little bit different than much of the party fundraising in the past.

And so a lot of people thought, boy, these organizations are just what I have been looking for. They are going to involve people in the political process, they are going to win the election, they are going to help elect my governor, they are going to help elect my state legislator, and they are going to help Democrats reclaim the White House. And all those factors, I think, are a very important piece of understanding what happened in 2004 and make it very interesting and difficult, I think, to predict what is going to happen in the future. How much of that energy around the presidential is going to stay with these organizations? We’ll have to wait and see, just as we are eagerly waiting to see whether all those volunteers that were so excited in 2004 will continue to work to contact voters.

I want to talk a little bit about the coordination, the comments of what we were doing with the party and whether the party really had a role or an official role in starting ACT, and to some extent the Media Fund, though that is not exactly my organization but I can make some comments on that.

I think there is an important distinction between the Democratic Party or the Republican Party, which are legal entities, and Democrats. Obviously the people who were going to support an organization that wants to elect Democrats at all levels are going to be Democrats. And the people that we worked with to create ACT were people that were very active in the Democratic Party, active in different kinds of organizations like labor unions, environmental groups, but they tended to support Democratic candidates.

Obviously we did need credibility to start this new organization. I think some of the leadership in the program created that kind of credibility, but the person that you would reach out to obviously is the number-one Democrat, and that would be former President Clinton. But that is a far different thing than saying that the party was involved in starting these organizations. The party was not involved in starting any of them. Democrats who have a lot of interest in winning for Democrats were involved.

I want to talk also about why I think we have campaign finance reform, and certainly this has been a long-range, long-term commitment and issue for me. My first job in Washington was at Common Cause in the early ’70s when we passed the 1974 law. I care very much about making sure the election system works, and as the founder of EMILY’s List, I am quite aware of some of the problems in the election and how it keeps newcomers, or women in my case, out of the system. I think it is very important that we create places where people can come together and participate in the election process. It is the essence of our First Amendment right and this democracy.

Now, the Court has talked about placing restrictions on that right because of trying to stop corruption. And I think in some sense they did that in BCRA and had some very calculated decisions about separating the federal candidates, federal office holders, and federal parties from the raising of big soft money contributions. But I think we have to be very careful about how we look at this corruption limits on these organizations. And I want to talk a little bit about EMILY’s List in that regard because I think ACT – frankly because we were so successful in raising money – has become sort of a lightening rod for this discussion.

So, go away from ACT and go back to EMILY’s List. EMILY’s List, to bring women into political office, does a number of things. For example, we train college kids in a new program called Campaign Corps. We take recent graduates, we train them, we place them on races whether they are federal or non-federal races. When the election is over we bring them back, we give them a debriefing, we try to help them get a job, put them on the career track of working in politics.

We spend a lot of effort trying to bring new women into office by having a Political Opportunity Program that trains women, supports women financially who are running for state legislative office, for state office, and for some local offices. We do a big Women Vote program because we think if we talk to women about issues, we can energize them enough and get them to the polls. When they go to those polls, we think those women are going to elect a lot more women, they are going to elect women to federal office, they are going to elect women to state office. And that that it is a good thing for our democracy to energize the voting base, particularly women, to make sure that their influence is felt in the election process. And of course we raise a lot money of and give money to candidates – federal candidates and non-federal candidates.

And so a healthy political action committee, which I think EMILY’s List is, is doing a whole range of activities. None of these activities are related to lobbying people on Capitol Hill. None of the activities, both for ACT or EMILY’s List in terms of raising money, are about using federal candidates to raise that money. There is absolutely no connection between what a federal candidate is doing in their race and what we are doing in our organizations to raise soft money.

And so I think BCRA, which drew the line and said that the corruption should be to separate the federal candidates and federal party entities from soft money, made a lot of sense, but I also think we need to continue, as the Congress did, the ability of political committees to raise money and support candidates both in the federal and non-federal level.

So I understand the energy around money and politics, I understand the concerns, but I also am very mindful of the importance of maintaining organizations like EMILY’s List that can bring newcomers into the political process that totally disclose and are transparent about both our contributions and what we are doing, and ultimately energize people to participate in elections.

MR. MALBIN: Thank you.

The next speaker is Mike Russell from Creative Response Concepts.

MIKE RUSSELL: Thank you, Michael, Steve, Ellen. I appreciated everybody’s remarks this morning.

I am most happy to participate in this discussion on the role of 527s and the recent election cycle and to discuss what reforms, if any, are going to be needed as the parties, the citizen activist organizations, the interest groups and the press keep a very watchful eye on 2006 and 2008.

I also want to thank the Campaign Finance Institute for hosting this event. The research paper that Steve just discussed I think is a very scholarly and thorough examination of the process that we have all witnessed and that many of us in the room played a role in. I think this paper serves as a good foundation for what I imagine is going to be a robust debate in terms of the – over the role and the influence in the future of 527s in the political process.

The closing graph of the CFI document includes a statement that many veterans of politics often use as a personal mantra – “There is nothing more hazardous in politics than predictions” – and I certainly agree with that statement. It is difficult, if not impossible, to determine what sort of expanded role 527s are going to assume in coming elections, whether corporate dollars flow into 527s is the $64,000 – maybe it’s the $64 million or $164 million question.

But it is, I think, for certain that given the role and influence that many of these groups had in this last election cycle, their impact on the election process is going to increase. They are going to operate with greater resources; they are going to operate, I think, with greater efficiency; and I think they are going to have even more impact.

And it’s important to remember that the 527 groups were really the product of campaign finance reform legislation – as this paper pointed out, the ongoing scrutiny of the IRS and the FEC on citizen activist organizations like the Christian Coalition, which was denied its long-term application for 501(c)(4) status. So the rise of 527s came as a result of these legislative efforts to essentially stem the flow – the influx of soft money into the political process.

And there is debate over whether this occurred. Clearly, the CFI research shows that fewer soft dollars entered the 527s. It was a negligible amount of money. One thing we do know: the reporting process of 527s was certainly open and out there for everybody to see. Anyone who contributed $1,000 or more for the Swift Boat Veterans and POWs for Truth was listed on a donor roll. And I would submit that’s a very positive development in this recent election cycle.

Full disclosure of these contributions – and we can argue over what constitutes a major donation – $1,000, $5,000, $15,000 – whatever that figure is, is determined by the FCC, but full disclosure of these contributions I think is key and listing all of the people who support these organizations is clearly the right thing to do and is clearly moving us in the right direction.

If large companies become squeamish about giving millions to a 527 then they are going to do one of two things: they are going to self-police themselves or they are going to give maybe in a bi-partisan fashion and give to groups on both sides of the aisle. Or maybe I might add a third thing: they may use their influence to try to temper the message that the 527s are putting out. We don’t know.

We hear a lot of debate over the amount of money that is involved in the political process and that too much money is spent on campaigns. I would argue once again that as long as we have full disclosure with organizations like 527s involving individuals, corporations, citizen groups, that is good for the process.

The Swift Boat Vets raised a little over $25 million in this last cycle; $8 million of it came over the Internet. Our average contribution was about $50 to $60. We had a tremendous amount of outpouring. You heard from Ellen in terms of the amount of grassroots activity that became involved with her organizations – and, again, the stats from the CFI document talking about – I want to make sure I get these right – that 12 percent of the people who gave between $5,000 and $100,000, that was almost $30 million, 12 percent of the total giving cycle. That’s a tremendous amount of grassroots activity – individuals offering contributions to either sponsor messages that they embrace or to help these organizations just raise their own voice.

Mr. Soros spent roughly $30 million of his own money in this last election cycle, and he his going to have to evaluate whether he received a healthy return on that investment. And he’s either going to decide to make new contributions, make adjustments, or find other ways to impact the public policy debate.

At the end of the day, there were several groups that were successful in getting their message out while there were other groups that experienced difficulty breaking through the noise and the clutter of a campaign filled with messages covering virtually every aspect of the election debate. Some groups had a lot of money to spend; others didn’t. And I think, again, this cycle proved that you didn’t necessarily need a huge bankroll to be effective.

The first Swift Boat ad aired in three states. It had just a little over $500,000 behind it and the ad went up for two weeks. By the time that ad finished running, survey data indicated nearly 49 percent of the American people were aware of that ad mainly because of news organizations covering this event and the organization’s ongoing ability to get its message out.

And so, you know, we heard a lot in this past campaign about wealthy individuals who contributed millions to 527s. Did the public really care, I think is a question. I’m not at all sure. Publicity around those donations actually helped the 527 groups raise money. So the press actually did the 527s a favor by reporting on who was offering financial backing to these groups.

Some groups were successful. They spent millions and attained a good chance – a very good breakthrough of their message. Others received less than adequate results. And I think it is important to know that we focus a lot about the amount of money spent, but at the end of the day, I think it really gets down to a simple word, and that is your message.

The debate over how to craft an effective campaign message is one I think we’re going to save for another day, but in closing I am going to offer this: I think the days of campaigns ignoring the human face in the cycle are over. Agree or disagree with the Swift Boat message, one thing is for sure: these were real veterans and former prisoners of war – more than 250 of them who came up and stepped up and discussed their issues about John Kerry and this election cycle. The Progress for America Fund featured an ad with Ashley Faulkner, a little girl who talked very candidly about the president’s personal impact on her. And I think that part of the reason these ads were successful is they were not messages created inside the beltway; these were real people telling real stories, voicing real concerns.

And I think that many of the ads in past campaigns that did not include this human face, that do not show the real impact of what public policy or what a candidate is going to – how that candidate is going to impact individuals in this country – I think those ads are just going to be less and less effective; they may be somewhat effective but I think the American people are going to start dismissing a lot of those ads as just white noise. I think that happened to some groups in this cycle.

I think for the most part -- and in closing this morning -- I think that the strategy and the tactics behind the messages that these 527s want to come forward with in future campaign cycles is going to have to be honed, and they are going to have real people and real grassroots activism behind them.

Thank you all this morning. I appreciate being involved in the ongoing discussion here.

MR. MALBIN: Thank you. Thank you, Mike and Ellen and Steve.

In the interest of the fact that we’re running a little later than we had planned, I am going to not have an interchange upfront but go directly to questions. We’ll take a few questions and then we can move forward. I suspect that the questions will offer an opportunity for whatever points people want to make.

I see Costas up with his hand first before – obviously primed with a question. Introduce yourselves. Let’s have a microphone right up here and we’ll get started.

Q: Thank you. Costas Panagopoulos, New York University.

I would like to direct my question to Steve – some very interesting information in your findings, and I was curious if you could share with us any partisan differences you may have observed with respect to pro-Democratic or pro-Republican groups, and any differences that you found or advantages to one party or another.

MR. WEISSMAN: Well -- can you hear me? One of the things we looked at was how much was spent for pro-Democratic groups versus pro-Republican groups, and it was about a three-to-one advantage for the Democrats. When you eliminate one feature that was there in 2002 that was abolished by BCRA – a lot of people forget that BCRA abolished a kind of 527 money, which was that of congressional leadership PACs. They were soft money accounts of Congressional leaders. There was $37 million in 46 leadership PACs.

So if you include the leadership PACs, since the Democrats were able to collect a lot of money that way but the Republicans had a better ratio -- they had a higher proportion than normal – basically you had about a two-and-a-half-to-one Democratic to Republican ratio. And if you take out the leadership PACs, because they no longer exist, and you just look at the 527s without counting them in 2002, it’s three-to-one, and it was three-to-one again in 2004.

The other difference – and maybe I can reply a little bit to Ellen’s point about the coordination – the other difference was the Republicans had to be a little more forward with their party’s support of the 527 because they started – they ended up behind. They were fighting the 527s and then the FEC rejected their argument so they had to come out with that statement. But that was a Bush campaign, RNC joint statement that really gave the green light to go ahead and support Progress for America.

The Democrats – I think Ellen and I would probably agree that there was, at least among many donors, a perception that the Democratic Party was behind these efforts. Obviously the Media Fund had started as a result of the Democratic Party taskforce. America Coming Together was an authentic interest group initiative, grassroots by many organizations, but the presence of Harold Ickes, who continued for a long time during the fundraising and going to some of the later meetings as a paid consultant to the Democratic National Committee and high up in McAuliffe’s brain trust, certainly added to the perception.

So perhaps the Democrats – and no one is saying Harold Ickes, who is a very engaging person, was doing anything illegal or violating any regulations, but the Democrats I think could be more nuanced than the Republicans could be in the support of the 527s. Nonetheless, I refuse to believe that Terry McAuliffe is so naïve as to think he’s not supporting these 527s when his leading consultants – one of his leading consultants, who is on the payroll, is fostering their growth. And when President Clinton, who appointed him and who was very active in supporting Democratic candidates, is brought in by Harold Ickes to talk to donors, I don’t think that McAuliffe sits back and says, well, you know, gee, that’s an interesting independent effort that is going on.

MS. MALCOLM: Yeah, I would like to respond to that. Actually, donors didn’t talk about the Democratic Party with us very much. Some of them did who had long- standing involvement with the Democratic Party and were more concerned about sort of where that went. But the donors were not giving to ACT because of the party; they were giving because they wanted to make a difference on the election and they thought we were smart and they liked the program that we set out. And that was a prime motivator for them.

And frankly, if we went to them and had some crummy program and said, give us your money, and whatever, I don’t think we would have been successful. I think, you know, that the party was not particularly an issue for most of the donors and I think actually your numbers show that as they show the vast increase of the big donors giving to these 527s, especially ACT and the Media Fund, more than they had given to the party in the past.

Ironically, if you said that to our fundraisers – our fundraising staff, some of them would be laughing because there were definitely times when people who were raising money for the party it appeared to us were telling people not to support our efforts. So, you know, if there was an example of non-coordination and non-complicity, it was that they were actually saying, oh, no, no, no, no, no, no, you know, just focus on us, just focus on us as any good aggressive, young fundraising staff person I suppose would want to do.

MR. WEISSMAN: I agree that there was a probably a variety of motivations at work, but also there were different fundraisers; some were cause-oriented and some were focused on the quote, “access donors.”

MS. MALCOLM: I think, Steve, at the end of the day, it really doesn’t matter. I mean, the issue is, how do we talk about campaign reform and the effect of that? Democrats are going to support Democratic organizations. And so, you know, as long as there is not an illegal form of coordination, which you have said there is not, I think that is the issue for discussion. And the fact that Democrats support Democratic groups and Republicans support Republican groups is not novel or, you know, you wouldn’t expect that.

MR. MALBIN: Mike – did you have something you wanted to add?

MR. RUSSELL: I was essentially going to agree that we saw a lot of grassroots support, especially with the Swift Boat people. They were engaged. These were individuals who may have written a check to the Republican Party either on a local or a state level or not. They were just – some people described themselves as very apolitical but they embraced the message and the mission of this particular organization, so they got behind it for that reason.

That’s why I think, once again, you know, it’s your message in this campaign and in future campaigns that’s ultimately going to motivate people to be involved. People are going to respect and appreciate what Ellen does; they’re going to get behind those programs. And in the case of the Swift Vote Veterans or the POWs, that was a message that resonated through a different group of people and they stepped up to embrace that message.

MR. MALBIN: We have two in the back row. You decide who goes first.

Q: Frank Clemente of Public Citizen.

For Steve and Mike, we were intrigued that the business community didn’t come in a big way into the 527 funding. And I’m wondering, Steve, if you interviewed some of the political money folks in the business community and could you give us some reflection on what they might have said to you, if you did.

And Mike, I’m wondering if, you know, the elasticity in the amount of money that is in the business community that potentially is there, both from corporations themselves and also from individual – you know, major folks like Arnall. We would – I’m wondering if you think the dam has been broken or whatever resistance was there has now been broken because of the success of the Republican 527s, and so in the next cycle, folks will be much less resistant and much more open to putting in money very early into the process and we’ll see a lot more money from the Republican business side.

MR. RUSSELL: I would agree with the premise that the success of some of these groups could serve as a catalyst for the business community to take a good, hard look at this and found out who’s – how to get involved. Again, I think that at the end of the day there is going to be scrutiny on these groups because many of them will perhaps go out with a message that corporations will be less enthused about supporting; they’re going to have to make decisions based on the temperature of these 527s, their – (audio break, tape change) – ones that are more established and did well. Perhaps that door could open to them.

MR. WEISSMAN: Briefly, we did not interview business donors but we interviewed some of the groups that tried to get business donors. And Progress For America, for example, had originally counted on getting about 60 percent of their money from corporations and ended up getting probably one percent, although they got from some rich individuals who happened to be in corporations. And I think that the explanation given to us most frequently was that the general counsels of corporations were saying, well, it’s not clear what the FEC is going to do. They had postponed in May a final decision until August and the fundraising technique was not established.

On the other hand, perhaps these general counsel were using this as an excuse not to give any money because they didn’t want to get leaned on or blackmailed, extorted into giving money that they had not willingly even given as soft money to the parties; they had given it because they were being pushed to give it. And since these groups had a less tenuous – a more tenuous relationship to the parties, especially in the spring and summer, then, you know, you could have the possibility of saying, well, I’m not – I’m helping the convention or I’m doing something else. You know, that private interests spent $138 million on the host committees for the Republican and Democratic conventions. It was a huge outlet for soft money from companies. So I think they have been trying to avoid this (527s).

Whether that will continue I think depends in part on whether these groups are perceived, whatever the technicalities -- whether they are perceived by many donors as close enough to the party that they feel some pressure. Progress for America, for example, has announced – it’s been in the paper, I think, the other day or so – I mean, they are going to – they are leading a major pro-Social Security reform campaign with the Bush administration. And if they become looked at as Republican, pro-Republican- Party 527, you know, or if any group on the Democratic side should become looked at that way, they could become more vehicles than they are today – not as powerful as the parties were – not as a compulsory as far as corporate soft money.

MR. MALBIN: I want to let you know about some chapters in the book that have not been summarized. I’m a participant in an ongoing, long-term interest group study, and we have another chapter on where the soft money went. Steve Weissman and I thoroughly agree on the facts but we have different guesses about what the future might bring.

Most corporations that gave soft money stayed out of the picture. I think that most corporations are organizationally quite cautious and I would not expect them to get involved – personally would not expect most to get involved with forward-leaning 527s that engage in negative attacks on an incumbent. No way.

So what BCRA, among other things, accomplished is that organizations that give primarily because they are being asked by officeholders who are leaders are not giving. You have to have some much stronger political motivation to give. Many of the people who gave to 527s in some way – I mean they own businesses; they’re entrepreneurs and they’re rich, but there is a different profile – they’re a different profile from the ones who give to the convention committees as well, I believe. But I think there is a lot of nuance here and there are different avenues.

Next – I don’t know if I – Trevor Potter was standing with a microphone in hand so –

Q: Trevor Potter at the Campaign Legal Center – a, I guess, philosophical question for Mike Russell about Swift Boats.

Swift Boats was created this year apparently for the sole purpose of attacking John Kerry and his record, which it did very effectively, and raised, as you’ve described, millions of dollars from a whole range of sources to do it. But the question is, what in your view is the justification for having that group engaged in that purpose operate outside of the campaign contribution limits that other groups that are engaged in the presidential campaign are covered by?

MR. RUSSELL: I think this: I think the Swift Boat Vets essentially capitalized on the existing political landscape, and these – again, these 527s were created and so that avenue existed. These veterans were apolitical by nature, had no real desire to get into a long-term career as political analysts or activists, and so they essentially looked at the landscape, saw this as a vehicle, formed, organized, raised their money, and did the best job that they could with the idea that more than likely they would essentially fold down – stand down, as they say in the military, you know, after the election was over.

So essentially they capitalized on the most expeditious route that they could use to be as effective as possible and use the 527 vehicle in that way.

Q: Oh, that’s true, but why should they be spending unlimited contributions, given in most cases by people who were not – in many cases by people who were not veterans themselves? Why should they be using unlimited funds when the campaigns and the political committees doing the same sort of advertising had to take limited $5,000-capped funds from individuals?

MR. RUSSELL: It is an interesting question, and I think one of the things that I did like to see – one of the, I think, more positive developments of this cycle was the 527s allowed for these citizen groups to step forward and mobilize very quickly and utilize – raise money, spend resources the way they see fit. I’m sure the parties are looking at this and saying, in some cases you all had a -- perhaps an unfair advantage; that you were able to essentially come and go and do as you please in this election cycle and spend how you wanted.

Whether that is going to change, I don’t know. It does create an inconsistency, but I think the bigger issue here is there has got to be a vehicle in this country for the average citizen to come forward with a concern. And I think that we’re seeing, with the combination of the Internet and the ability to raise money so quickly with fairly limited resources, the opportunity for real citizen organizations to mobilize, step up, and with the right message break through this noise that perpetuates every campaign cycle.

And so I think this is a good thing for this country when more citizens get involved in the process and they figure out ways to utilize technology and raise their own money and get involved in the debate, whether they can in some cases move a little faster than the party machinery and they are under different regulations – but they start the game with nothing. They mobilize around an issue or an event and they want to get in, and I think it is appropriate that we have a vehicle, be it a 527 or another group classification – whatever the tax code changes, whatever you want to call it in the next cycle. But I think it is appropriate and fair that these organizations do have – these citizens do have a way to form and get involved in the process.

MR. MALBIN: Mike, I want to expand the question slightly. Your statement was about unlimited contributions from individuals and obviously there is a legal controversy but I wanted you to stay with the policy question, which is what you did. Do you feel the same way about corporate and labor union contributions to 527s?

MR. RUSSELL: Personally, yes. I think that, again, if anybody gives more than $1,000 to a 527, The Washington Post, The L.A. Times, The New York Times, the wire services and the major networks are going to find that out – (snaps fingers) – like that. Corporate America is going to have to make a decision on whether it wants to back the message of the Swift Boat Veterans and POWs for Truth. If they choose not to back that message, they’re going to self-police themselves and stay out of that. If they want to, they are fully allowed to get involved.

MS. MALCOLM: I think there is a distinction to be made between talking about issues, which, as I understand, the 527s can do, and directly focusing on one election, one candidate, trying to influence that campaign. To me, the Swift Boat ads crossed the line. They were not a discussion about issues, they were not a discussion about John Kerry’s position on such-and-such or the Democrats’ position on healthcare. They were clearly designed to attack one federal candidate in influencing the election. So to me, that has to be done by a political action committee that has a different series of regulations, but I am not a lawyer or a regulator and I will leave that decision to others.

MR. MALBIN: Okay, it’s long after the original schedule said we were going to end this session. Let me tell what the drill is from here.

MS. : (Off mike.)

MR. MALBIN: No?

MS. : We’re scheduled to end at 12:30.

MR. MALBIN: We’re not long after. Thank you. I thought it was 12:00. Thank you; I stand corrected.

Then I see lots of hands. (Laughter.) Go right ahead.

Q: Kay Guinane with OMB Watch. I wanted to ask if it’s possible to get data that helps distinguish different types of groups within this large and very diverse 527 community and to determine which ones of them are membership-governed or really grassroots organizations as opposed to maybe fronts for a trade association or a few wealthy individuals, and if there is any of that information coming out of the campaign, and how many of those donors might have been in a very small category of less than $5,000, maybe in the $25, $50 range.

MR. MALBIN: Are you directing it to Steve?

Q: Yes.

MR. WEISSMAN: We have just the beginning of that in a list of the – I think it’s 29 527 groups that we considered mainly the more stable groups – the ones active in both 2002 and 2004, and about 22 of them have political action committees – hard money committees, including – and there is a few like Ellen’s group, ACT, that also have hard money committees, though – and for the most part of the campaign, ACT’s hard money was listed as only 2 percent of what they were getting.

But I think beginning to look at these groups – this list of 29 groups we have in our paper, see which ones have PACs and which ones have -- and then go on from there: which ones have (c)(3)s, (c)(4)s and so forth. They are very well known groups and they are easy, I think, to research. I think that distinction, as you are mentioning it, is very important.

But from the campaign finance regulatory point of view, you still have a problem that if the New Democratic Network goes out there and asks somebody for money for their PAC, they are regulated; they have to have no more than $5,000 a year from that person and they can’t take – and it has to be within a certain group of people.

But if the same group then goes out and says, okay, for our independent 527, give us another $5,000 or $50,000, that is not regulated. And the idea is, well, one kind of contribution can corrupt but the other one can’t. And that’s the issue, the problem we’re dealing with 527s, with these better-rooted groups: can you really have two separate means of regulating the money, one which is confined and one which isn’t, or is there a rationale for having only one?

MS. MALCOLM: If I could just make a comment on one word: I would not say “regulated.” I spent an awful lot of time with lawyers; I think we were regulated. The non-federal money was not limited and I think there is an important distinction. All that non-federal money is disclosed by law, by regulation. It is out there. People can see it; they know what’s going on; it’s transparent, so there are regulations.

MR. WEISSMAN: Absolutely.

MR. MALBIN: For the sake of those who are not into the arcania of the legal issues – and I see one question here and there that I’m going to go to very quickly – and we certainly do not want to go into them larger because I don’t understand them all, but those issues are whether existing activities fit within existing political committee definitions, which, if they did, if they fit into the definitions of federal political committee, then activities would be covered by $5,000 contribution limits from individuals and the corporate and labor union contributions would be banned. And if it fit within those limits, then existing court precedent would seem to uphold the corporate and labor bans and there is no existing precedent on individual contribution limits to such committees.

I am sure Laurie (sp) is going to correct me if that’s wrong, but that is separate from the policy question which we’ve been discussing.

Jeff Bell had a question.

Q: I’m Jeff Bell. I’m a member of the board of the Campaign Finance Institute. I would like to address this question to Ms. Malcolm.

If I understood you correctly, you said that the Swift Boat Veterans, by accepting as much as several hundred thousand dollars from one individual in Texas, Bob Perry, crossed the line of legality because they were organized to attack a candidate. I just want to understand your position. George Soros announced he was going to give $30 million to defeat George W. Bush for reelection, giving it to one, two, three – I don’t know how many – newly created groups for that purpose, by his own statement. But that did not cross the line? Only the Swift Boats crossed the line, not what George Soros and the groups he gave to did?

MS. MALCOLM: Well, what Mr. Soros did was give money to a political action committee, and his personal intent was certainly to win the election for the Democrats and defeat George W. Bush. What I was saying about the Swift Boat organization – it is a pure 527, which I think then has to discuss issues in the election. When it is directly focused at a candidate, individual and his record, it is not a discussion of issues; it is a discussion of the candidate himself. And so to me that crosses the line into being a political activity clearly focused at a candidate.

Q: Just to get this clear. That should be prohibited but nothing that Mr. Soros did should be prohibited in any way?

MS. MALCOLM: What I think is important is not why George Soros gave money to ACT but what ACT did in term of its activities, which was put together a voter contact program that was designed – now, don’t forget, as a PAC we are more than correct in saying we were designing a program to win the presidential election and elect Democrats and all levels from governor down to state legislature. So we were doing –

Q: I was talking about the 527s obviously. Your answer – you don’t have to say any more; your answer is extremely illuminating.

MS. MALCOLM: Thank you. (Laughter.)

MR. RUSSELL: I have agreed with Ellen so much today I am sorry I have to disagree here. And I respect Ellen’s observation, but the Swift Boat Veterans for Truth did have an issue: the issue of John Kerry’s fitness as commander in chief of the armed forces. That was the sole issue of their campaign. They stayed focused on that and they brought information to light that asked people to call that into question.

MR. MALBIN: In the back of the room to the left was the next question.

Q: Thanks, Michael. Mark Schmidt with the New America Foundation. And of course I should disclose that until Tuesday I worked for the foundation that was created by George Soros on campaign finance reform.

My question here is it’s a little – it seems a little odd to me that you can have a discussion about the differences between the Democratic and Republican 527s that doesn’t take into account the very distinct circumstances of what people thought about a year ago. About a year ago Democrats thought, one, that they were going to have a nominee who was not – who was going to be participating in the broken – as this Campaign Finance Institute has demonstrated – in the broken presidential public financing system and would therefore have no ability to raise or spend money after the primary – after securing the nomination in March until August, so that there would be this huge dark period.

And also, people believed that there was no such thing as a Democratic small donor base because it hadn’t been built up over the years so that the premium on 527s was enormous compared to the Bush campaign, which was, you know, everybody knew it was out of the public financing system, wouldn’t be limited, was going to raise $185 million. There was very little sense of need for 527s on the Republican side whereas in the Democratic side there was an enormous sense that, if you don’t do this you have no campaign for the crucial five or six months and that that – presumably that accounted for a large amount of what was raised, and that in the future, knowing that you’ll probably never – unless we fix the presidential system you will never have a candidate participate in it again, and knowing that there is in fact a small donor base for the Democrats, the culture and the raising of money for 527s is going to be somewhat different under those circumstances. And I wonder why you wouldn’t take more account of that circumstance.

MR. MALBIN: Actually, we did say that the presidential circumstances were the basic environment that conditioned all of this. But can I convert that to this question: whether the incentive for maintaining this organization will still be there in the absence of a presidential race, because I’m curious to hear about that from Ellen Malcolm. In the absence of this race, what are the incentives, the motivations, and the ability, the wherewithal to keep these things going?

MS. MALCOLM: As I think I mentioned, I think there were many reasons people gave to ACT. The number one reason, no question about it, was to defeat George W. Bush. There was a passion to do that that brought out voters, that brought out volunteers on the street, that brought out new hard-money donors, that brought out new and larger soft-money contributions.

But there were other pieces of that, and when I would travel around in the final months and I would do events about ACT and I would talk about our interest in investing long term in building an infrastructure that would bring out progressive voters, and that it was as important to focus on the presidential race; it was equally important to elect Democrats and progressives to state legislatures, to the House, the Senate, to governorships. And people would cheer. They were so hungry for an organization that would invest in doing that kind of work and be smart about it, and bring more voters to the polls.

I think a lot of those donors will look at what ACT did and they will be very excited, and they will be impressed, and they will stay with this, and they will continue to support the organization. At what size those contributions will be, I don’t know, and I eagerly await finding out. (Laughter.)

MR. MALBIN: Mike, do you want to comment on Progress or –

MR. RUSSELL: I think that you are never going to be able to sustain the kind of momentum in terms of support, fundraising, grassroots activism that we’ve just seen. The election is over and a lot of people are either very happy with the outcome of the election or they are very upset about it and they are going to start planning for the next election either on a local, state, or a federal level.

There is no way to maintain that kind of momentum and that is something that every campaign operative on both sides of the aisle recognizes. There are cycles; there are opportunities to strike while the iron is hot and get your people energized and mobilized, and right now is not particularly the time to do it. There is going to be some drop-off; that is just going to be anticipated. But I do think that the structure for involvement on a local, grassroots level has been heightened by this cycle, and I think it’s going to be easier for people to reengage when they are interested.

MR. WEISSMAN: If I could just make a brief comment on this. I think it has to be – I think your point is excellent, but it has to also be kept in mind that they had $150 million in 2002, the 527s, with no 2004 election coming up, with no presidential election. So there was already a base of people. And it’s not just parties that are involved in this, as Ellen points out. These have been initiated at least often by grassroots groups. Swift Boats is another. Sometimes candidates and people who are aides to candidates have been involved in these things.

So it isn’t simply a question of the money is now with the parties; all these people are going to give up. And insofar as you can raise large amounts of money in this way legally, it certainly is going to be an option. Whether or not they come up in the 2006 level, I don’t know; but in the 2008 presidential election, I expect there will be a country as polarized as the country is today, at least if present trends continue. And there could well be, I think, given the genie out of the bottle of the large contributions, an expansion of the efforts of the 527s.

MR. MALBIN: One of the nice things about having a difference of predictions is that it means that there can be a book after the current book. (Laughter.)

I’ve been given a very strong signal that I need to let you know where the lunches are, and I know there are a large number of questions that people still want to ask. I hope there will be an opportunity for pursuing them. But I want to give my sincere thanks to the panelists – Steve, Ellen and Mike. This has been another terrific discussion and I will explain to you what we’re doing now. Once we get up and leave – not leave but just for a moment – there are boxed lunches directly outside the door. We’re breaking for long enough for you to get the boxed lunches and come right back because the next set of panelists are already here and we do want to get moving into it. So I’m hoping that this is about a 10-minute – not even that. Just get your lunches, come right back, and we will start.

Thank you.

(End of panel two.)