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Dornauer, M.R. 1 Introduction a Major Impetus in My Decision To Dornauer, M.R. 1 Introduction A major impetus in my decision to research 527s is the scant amount of information available about these groups. Prior to the 2000 election, their election related activities were negligible. The last two election cycles have seen a tremendous growth of these groups. With over $40 million spent by these groups in television ads alone, they had a profound impact on the past Presidential election. However, minimal research exists on their true impact. Since 527s are not regulated by the Federal Election Committee, but rather within the Internal Revenue Code, they were not exploited as advocacy groups until after the passage of the McCain- Feingold Bipartisan Campaign Reform Act (BCRA) in 2002. As a result, 527s are the new loophole in politics. They can raise and spend unlimited amounts of money. Following the caustic 2004 Presidential race, they have become a burgeoning facet of electoral politics. Wealthy individuals, such as Peter Lewis and George Soros, have posted large sums of money to fund the activities of these groups. The 2004 election season saw myriad ads and voter mobilization drives aimed at the general electorate. These ads were often filled with sharp messages tailored to benefit one candidate. Although they never called for the direct election or defeat of a specific candidate, their messages were clear. Research in this field is limited. The enormous amount of money used by these groups to help elect or defeat candidates is becoming omnipresent at all levels of government. These groups give a new meaning to the flow of soft money which was thought to be eliminated with the BCRA. They appear to be the future avenues of campaign ads and grassroots mobilization for both major parties. Should these groups be subjected to the same stringent campaign finance laws that govern other political interest groups, or will they continue to flourish and allow Dornauer, M.R. 2 wealthy individuals to exert their power in future elections? My research will attempt to answer these questions. When I began my research last year, 527s were barely a blip on the political radar screen. However, over the past year they have had a major impact on the political landscape in America. 527s are an amorphous, constantly evolving subject area. I chose this topic predicting that these groups may play a pivotal role in 2004. At the outset of my research, financier magnate and avowed Bush basher, George Soros pledged an unprecedented $10 million to various Democratic-leaning 527s to defeat Bush in the upcoming election. This initially piqued my interest in the topic and was the harbinger for the salience of these groups. Although the ever- evolving subject was enthralling to follow in the media, it also posed severe challenges to my research. Rather, one of the main incentives for to pursue this topic was the scant amount of available research. I was in the unique yet intriguing situation as I saw my topic rapidly progress in importance and attention throughout my research. Undertaking novel research in the field of campaign finance reform was one of my primary goals. However, the lack of credible sources, especially in terms of traditional academic resources, proved a greater challenge than I initially foresaw. Without these sources I embarked upon the goal to seek personal interviews with the largest and most influential 527s of the campaign. Unfortunately, this was my first roadblock; unbeknownst to me, these groups would come under intense legal scrutiny which would inhibit them from disclosing any information or offering opinions about their role in the electoral and campaign finance processes. In January 2005, I sent out letters to the twelve largest spending 527s seeking to schedule a phone or personal interview with a representative from their office. I asked for a Dornauer, M.R. 3 response via email or phone. After three weeks of no responses from any of the groups, I attempted to call them. This effort proved to be the greatest frustration in my research. By February I began to make headway with a few of the Democratic groups, namely New Democratic Network and Voices for Working Families, and America Votes, all of which offered to review my questionnaire prior to answering it. However, an ironic twist ensued during this time. On February 2nd 2005, Senators John McCain and Russell Feingold introduced a bill severely limiting the contribution limits of 527s, putting them under the surveillance of the Federal Elections Commission. Although this legislation was exactly what I had proposed as the working hypothesis of my thesis, it caused the 527s to rescind on their offers to answer my questionnaire and shut off any opportunity for personal interviews with these groups. Lacking the credentials of high-powered news sources, who admit to the difficulty of obtaining information from these secretive groups, I was forced to seek alternative means of research. Political interest groups have and always will find ways to circumvent campaign finance laws. 527s were formed primarily as a result of this circumvention and have become the dominant vehicle for soft money. This thesis will provide a brief historical analysis of campaign finance and how 527s came into existence. I then chronicle the rise of these groups within both major political parties in the past few years. The majority of the research is devoted to providing an investigation of their activities throughout the 2004 Presidential race, including the major groups, their strategies, contributors and activities during the electoral cycle. I then delve into the current proposed legislation pertaining to these groups and its anticipated impact. Finally, I offer my prediction for 527s and potential groups that may take their place as the new channel for soft money if the legislation is enacted and 527s are deemed ineffective. 527s have played an Dornauer, M.R. 4 important role in helping to register and mobilize an impressive percentage of the electorate in the 2004 Presidential race; however, the fact that the groups circumvent not only the spirit but the letter of campaign finance law merits their reform in order to curtail their use of illegal soft money and place their actions under the constraints of the Federal Elections Commission (FEC) in order to hold them to the same standards as other political committees. An Overview of Campaign Finance Throughout U.S. history, the government has attempted to mitigate the effects of money in campaign politics. Even President Theodore Roosevelt lamented the impact of “big money” corrupting the political process during his presidency. The Tillman Act of 1907, which prohibited corporations from making contributions “in connection with” federal elections, was a response to his concern. A similar prohibition was placed on labor unions in 1947 through a provision of the Taft-Hartley Act.1 There were limited disclosure provisions enacted in the next 20 years as campaign finance regulations were not effectively implemented until the aftermath of the Watergate scandal. 2 The Federal Election Campaign Act (FECA) was enacted in 1971, in response to escalating campaign costs. This initial law invoked minor disclosure requirements and contribution limits. The Watergate abuses, stemming from the 1972 Presidential campaign, were the impetus for a major revision of FECA in 1974.3 The FECA was implemented with the goal of curtailing the corruption that accompanied large, undisclosed donations and controlling rising campaign costs. Thus, FECA created a series of contribution limits and expenditure caps. 4 Prior to the law’s full implementation in the next presidential campaign, it was challenged in the landmark Supreme Court case, Buckley v. Valeo (1976). In this case, the Dornauer, M.R. 5 central question was pondered by Justice White: “Is money speech and speech money?” The Court’s majority ruled in dialectical opposition in regard to expenditures and contribution limits. Generally, the Court held campaign contributions and expenditures are protected by the First Amendment. These should only be limited in situations where “quid pro quos” accompany donations and lead to corruption. On the other hand, the Court asserted that Congress could not impose restrictions that limited campaigns from expressing support for their candidate.5 In terms of expenditures, the Court aligned with the free speech rights guaranteed by the First Amendment. The majority affirmed that it is unconstitutional for the government to mandate ceilings on political expenditures. Candidates, committees, interests groups and individuals have the constitutional right to spend. Conversely, the Court espoused that contributions are equivalent to proxy speech which is susceptible to corruption in the electoral process- the major factor the Court sought to guard against in its decision. Contributions did not garner the same Constitutional protection as expenditures because the Court reasoned that a candidate could be corrupted by the tacit political indebtedness of large contributors. Therefore, contribution limits can only be implemented to guard against corruption. This caveat between contributions and expenditure limitations had been criticized as one of the most egregious flaws in the Court’s history. In retrospect, the Court failed to perceive the influence of vast sums of money and resources being poured into campaigns in the form of “independent expenditures.” Limiting the flow of money in terms of equality was not a concern. Instead, the Court opened the floodgate for a proliferation of special interests and large individual donations. The Buckley decision also impacted political speech. Prior to the ruling, FECA had sought to control all contributions and expenditures made ‘in connection with’ federal elections Dornauer, M.R. 6 or made ‘relative to a clearly identified federal candidate.’ The Court ruled that this classification was overly broad and vague, which posed a serious threat to free speech. It rendered the law only applicable to “express advocacy.” In its infamous footnote fifty two, the Court defined express advocacy as explicitly calling for the election or defeat of a candidate.
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