6 Interest Groups and Advocacy Organizations After BCRA Robert G. Boatright, Michael J. Malbin, Mark J. Rozell, and Clyde Wilcox Before the Bipartisan Campaign Reform Act (BCRA) passed, much of the public rhetoric about it had to do with the role of special interests in politics. Logically, therefore, most people expected the law to have a significant impact on interest groups. But there was little agreement about what those effects would likely be. In this chapter, we examine the 2004 elections for early evidence. The focus will be on organizations that participated in elections before BCRA passed, as opposed to new participants who joined the fray afterwards. Predictions during the pre-BCRA dispute tended to fall between two polar positions. For the sake of simplicity let us call them the naı¨ve and the cynical. The naı¨ve view was that prohibiting soft money and regulating electioneering would mean that much of the money formerly spent on these items would disap- pear from the federal election arena. The cynical view liked to use what we and others have described as the ‘‘hydraulic’’ metaphor about money in politics—a metaphor that presents political money as a water-like substance that inevitably will seep around a law’s prohibitions until it can find a way once again to flow freely. In contrast with both of these perspectives, we have argued that the way an organization adapts to new election laws will vary with both the organization and with the times. The adaptations will depend internally on an organization’s goals and resources and externally on a number of contextual considerations besides the law, including both political considerations, such as competitiveness, and less political ones, such as the changing economics and technology of com- munications (Boatright et al. 2003). This chapter will use the 2004 elections to test these perspectives by asking the following questions. 112 ................. 15772$ $CH6 12-21-05 14:42:54 PS PAGE 112 Interest Groups and Advocacy Organizations After BCRA 113 • Soft money: BCRA prohibited the national political parties (and state or local parties engaged in federal election activity) from raising soft money. We ask: ⅙ Did the people and organizations that contributed significant amounts of soft money in 2000 and 2002 find new federal election outlets for their contributions or spending in 2004? ⅙ If the answer is not uniform, was there a systematic difference between those who participated financially in 2004 and those who did not? • Electioneering: BCRA prohibits corporations and labor unions from paying (directly or indirectly) for candidate-specific broadcast advertising within sixty days of a general election or thirty days of a primary. We ask: ⅙ Amount and timing: Did the new rules result in interest groups’ buying less candidate-specific broadcast advertising or shifting the timing of this advertising? Did specific organizations that had previously purchased political broadcast advertisements continue to do so? ⅙ Alternative activities: Did some organizations shift away from advertising and toward voter mobilization and other forms of nonbroadcast activity? If so, are there systematic differences between those that shifted and those that did not? Where there has been a shift, was BCRA the reason? To preview our answers: • The soft money prohibition did have a significant effect in 2004 on the former soft money donors of 2000 and 2002. ⅙ The vast majority of former soft money donors did not increase either their hard money contributions to candidates and parties or their contri- butions to independent committees organized under section 527 of the tax code. Among business givers (who made up the bulk of soft money donors), a few gave a lot more money, but most cut down. Large publicly traded corporations, which were a major source of soft money in 2000 and 2002, were far less likely to participate in 2004. Labor unions and a few individual megadonors individuals increased their giving. • The electioneering rules had marginal effects on interest group advertising in 2004. ⅙ Number and timing of ads—Even though corporate and labor treasury money can no longer pay for ads within the sixty-day window, there were almost as many electioneering ads within the window in 2004 as in 2000. There was a decline in the percentage of total ads broadcast within the sixty days, but this was because of a major increase in ads before the sixty- day window. The total number of ads surprised some who had supported BCRA in the expectation that it would reduce electioneering. But it was not so surprising to those who saw the literal text of the law as only affect- ing certain funding sources for broadcast advertising within a specific time period. Some of these latter supporters had predicted that advocacy organizations would continue to play a robust political role. ⅙ Organizations that shifted—Most 2004 electioneering ads were sponsored ................. 15772$ $CH6 12-21-05 14:42:54 PS PAGE 113 114 Robert G. Boatright et al. by new, presidency-focused 527 committees. The picture looks different for ongoing organizations. Many of these shifted resources away from television ads to voter mobilization. But because the shift in emphasis predates BCRA, it cannot be attributed to the new law. SOFT MONEY DONORS According to the Federal Election Commission, the six major national Demo- cratic and Republican party committees raised a combined total of $495 million of soft money in 1999–2000 and $496 million in 2001–2002 (see chapter 2, table 2.1). Itemized soft money contributions to Democratic and Republican commit- tees came to $436 million in 1999–2000 and $446 million in 2001–2002, exclud- ing transfers among party committees. • In 1999–2000, 48 percent of these itemized soft money contributions came from corporations, 39 percent from individuals, 7 percent from labor orga- nizations, 5 percent from trade associations, and 1 percent from other sources. • In 2001–2002, 42 percent came from corporations, 36 percent from individ- uals, 8 percent from labor, 6 percent from trade associations, 7 percent from candidates’ committees or politicians’ PACs, and 1 percent from other sources. Thus, corporations were financially the most important set of donors affected by BCRA’s ban on soft money. In addition, most of the individual donors were corporate executives whose contributions are grouped by some analysts together with those of their employers. While we have significant reservations about treat- ing an individual employee’s contributions as if they reflect the same concerns as an employer’s, we nevertheless find the grouping useful because of the ques- tion we are trying to answer. After BCRA became law, several observers predicted that corporations that used to donate soft money to the parties from their corpo- rate treasuries might (1) step up their efforts to persuade employees to contribute hard money to candidates either directly or through the companies’ PACs or (2) redirect some corporate contributions or large individual contributions from business owners and other corporate executives to 527 committees. The only way to know whether this occurred is to establish a baseline that includes individual as well as corporate contributions. Some also predicted an increase in corporate contributions to nonprofit issue advocacy organizations (organized under sec- tion 501(c)(4) of the tax code) or to trade associations (organized under section 501(c)(6)). However, a lack of disclosure makes it impossible for us to analyze support for these organizations here. Our analysis began with data supplied by the Center for Responsive Politics (CRP) on all entities whose organizational or individual contributions collec- tively equaled at least $100,000 in soft money given to the major national party ................. 15772$ $CH6 12-21-05 14:42:54 PS PAGE 114 Interest Groups and Advocacy Organizations After BCRA 115 committees in either 2000 or 2002. We included contributions from an organiza- tion’s treasury as well as all contributions from individuals employed by the organization. We then further limited the list to corporations, trade associations, and labor organizations that gave $100,000 or more soft money in both 2000 and 2002 and that gave (through organizational or individual contributions) some hard money or 527 contributions in 2004. We used these criteria because organi- zations that gave at least $100,000 in soft money in both of the earlier elections and were also active in 2004 should be the ones most likely to compensate for the soft money ban by increasing other activities. Thus, the selection criteria were biased in favor of finding substitution and compensation. The combined criteria produced a database of 429 organizations accounting for 43 percent of the political parties’ total soft money receipts in 2000 and 49 percent in 2002. CRP collected and separately accounted for all individual and PAC contributions from people associated with these 429 organizations for all three election cycles. This allowed us to compare their activity in 2000 and 2002 (when the organizations or those connected with them gave soft money) to 2004 (when they did not). The goal was to see whether hard money contributions rose significantly in 2004. For these same organizations (and individuals associated with the organiza- tions), we also compared Internal Revenue Service records of 527 contributions in 2003–2004 to similar data for 2001–2002. The Center for Public Integrity (the Campaign Finance Institute) supplied the 527 data for 2002; CFI analyzed the IRS data for 2003–2004. We did not analyze 527 data for 1999–2000 because 527 disclosure did not begin until the second half of 2000, and even then, the infor- mation about individuals only sporadically included employers. Disclosed receipts for federally active 527s in 2000 (as defined in chapter 5) totaled $74.7 million. We cannot say what fraction of this came from individuals or organiza- tions that meet our criteria.