FLOOR STATEMENT OF SENATOR JOHN McCAIN TO REQUEST UNANIMOUS CONSENT ON S. 2511, THE 527 REFORM ACT OF 2006
Jun 29 2006
Madam President, at the conclusion of my remarks, I will ask unanimous consent to move to consideration of S. 2511, legislation that requires that the law be enforced. That is, that the so-called 527s be made illegal and banned as they properly should be. I will be making that unanimous consent request after the conclusion of my remarks. I have been told the Democrat side will be objecting to moving to the legislation. I regret that very much.
The legislation is pretty straightforward. It requires any organization--including the so-called 527s--that falls under campaign finance contribution limits, as is any objective observer's reading of the law, to follow the law.
I regret we will be unable to move this important piece of legislation. It is simple and straightforward and designed to overcome the Federal Election Commissions's inexcusable failure to interpret properly the original Federal Election Campaign Act of 1974.
I point out to my colleagues that these 527s are a violation of the original Federal Election Campaign Act, now BCRA, known by some as McCain-Feingold. The Federal Election Commission, as in many cases, inexcusably fails to properly interpret the original Federal Election Campaign Act which would halt the illegal practice that has sprung up whereby 527 groups are now spending soft money on ads and other activities to influence Federal elections.
I understand fully the politics surrounding this issue, which unfortunately is going to cause some of my colleagues to oppose any reform. But the time has come to address this issue. We should put political prerogatives aside and do what is best for the American electorate. We need to have this debate. I am committed to working with my colleagues to resolve our differences. Let's bring this bill up, have a debate, and consider amendments. As my colleagues know, a number of 527 groups raised and spent a substantial amount of soft money in a blatant effort to influence the outcome of the 2004 election. These activities are illegal under existing laws, and yet, the FEC has failed to do its job and has refused to do anything to stop these illegal activities. Therefore, it is now up to Congress to pursue all possible steps to uphold FECA and overturn the FEC's misinterpretation of the campaign finance laws, which is improperly allowing 527 groups, whose purpose is to influence Federal elections, to spend soft money on these efforts.
In McConnell v. FEC, the Supreme Court noted wisely that money, like water, will look for ways to leak back into the system. With the enactment of the Bipartisan Campaign Reform Act of 2002, BCRA, the national parties were taken out of the soft money business. It did not take long before efforts were underway by some to bring soft money back into Federal elections through the vehicle of groups that operate as ``political organizations'' under section 527 of the IRS Code, or so-called ``527s.''
The soft money game is the same with these groups; they are raising multi-million-dollar donations from wealthy individuals, as well as large contributions from corporate and union contributions, and spending that soft money on broadcast communications that promote or attack Federal candidates, and voter mobilization efforts intended to influence Federal elections. We saw, firsthand, how a number of 527 groups raised and spent huge amounts of soft money in order to influence the outcome of the last Presidential election. These activities were prohibited under longstanding campaign finance law but, again, the FEC failed to properly enforce the law. As a result, federally oriented 527s spent over $400 million on the 2004 elections.
It turns out that almost half of the financing for 527 groups in the 2004 elections came from a relatively small number of very wealthy individuals who made huge soft money contributions. According to campaign finance scholar Tony Corrado, 25 wealthy individuals accounted for $126 million raised by 527 groups active in the 2004 Federal elections. This included 10 donors who gave at least $4 million each to 527s involved in the 2004 elections and two donors who each contributed over $20 million.
If that doesn't make a mockery of both campaign finance laws, nothing does. Two donors, $20 million each. Over $20 million each poured into the 2004 Presidential campaign.
Opponents of campaign finance reform like to point out that the activities of these 527s serve as proof that BCRA failed in its stated purpose to eliminate the corrupting influence of soft money in our political campaigns. Let me be perfectly clear: The 527 issue has nothing to do with BCRA. It has everything to do with a 1974 law and the failure of the Federal Election Commission to do its job and properly regulate the activities of these groups. The new campaign finance law, BCRA, has successfully accomplished its goals.
Last year, David Broder wrote in the Washington Post:
As one who has been skeptical of the claimed virtues of the McCain-Feingold campaign finance law, I am happy to concede that it has, in fact, passed its first test in the 2004 campaign with flying colors.
It is important to point out that this was accomplished despite all of the predictions at the time about how the national political parties would be financially undermined without soft money. That was the major source of opposition. This would destroy the national political parties. The national political parties raised more hard money in the 2004 election cycle than they raised in hard and soft money combined during the Presidential election cycle in 2000. In fact, Republican and Democratic national parties raised a record $1.2 billion for the 2004 elections. What is really good about that is the majority of that came from small donors, not large, huge, soft money contributions. They increased that donor base. Again, the Democratic National Committee has more than 2.5 million new donors; the Republican National Committee, more than 1 million new donors; Republican senatorial and congressional campaign committees, 700,000 new donors; Democratic congressional campaign committee, 230,000 new donors. That was the intent of the law. That is what happened.
According to Tony Corrado, the DNC has more than 2.5 million new donors, as I pointed out; the RNC more than a million new donors.
What is the problem? The problem is, the Federal Election Commission, even though directed by the Supreme Court, will still not enforce existing law.
The fact that the overwhelming majority of Federal 527s were created after the enactment of BCRA is no coincidence. Of the 68 Democrat-leaning 527 committees involved in the 2004 cycle, 54 of them were organized after BCRA. Of the 26 Republican-leaning 527 groups in the 2004, 13 were organized after the enactment of legislation which banned the use of soft money in Federal elections.
These groups were set up with every intention of circumventing the law. They could not circumvent the law if the Federal Election Commission would enforce the law. That is why we have to go to court again and again.
For the record, in order to enforce, to write regulations to enforce the BCRA, 13 of the 15 original regulations were thrown out by a Federal court judge--a remarkable performance on their part, remarkable.
S. 2511, the bill I would like to see brought before this Senate, voted on and passed, requires that 527s register as political committees and comply with Federal campaign finance laws, including Federal limits on the contributions they receive unless the money they raise is spent exclusively in connection with non-Federal candidate elections, State or local ballot initiatives, or the nomination or confirmation of individuals to nonelected offices. And it upholds the hard-fought victory of BCRA.
The legislation also sets new rules for Federal political committees that spend funds on voter mobilization efforts affecting both Federal and local races and, therefore, use both the Federal and non-Federal account under FEC regulations. The new rules would prevent unlimited soft money from being channeled into Federal elections through abuse of the Commission's allocation rules.
Under the legislation, at least half of the funds spent on voter mobilization activities by Federal political committees would have to be hard money from their Federal account. More importantly, the funds raised for their non-Federal account would come only from individuals and would be limited to no more than $25,000 per year per donor. Corporations and labor unions could not contribute to these non-Federal accounts.
To put it in simple terms, a George Soros could give $25,000 per year to a single political action committee as opposed to the $22 million he spent to finance these activities.
Let me be perfectly clear on one point. This proposal would not shut down 527s. It would simply require them to abide by the same Federal campaign finance rules that every other Federal political committee must abide by in spending money to influence Federal elections, nor is this bill intended to affect 501(c)(3) or (4) tax-exempt organizations.
Under the Internal Revenue Code, a 527 group is a ``political organization,'' which is a group whose primary purpose is to influence candidate elections or the appointment of individuals to public office. In other words, the 527 groups by definition are in the business of influencing campaigns and have voluntarily sought the tax advantages conferred on such political groups. These groups cannot be allowed to shirk their responsibilities to comply with Federal campaign finance laws when they are spending money to influence Federal elections.
The use of soft money by 527 groups to pay for ads attacking and promoting the 2004 Presidential candidates was not legal.
This is not a matter of the new campaign finance law, BCRA; it is a requirement of longstanding Federal campaign finance laws that go back to 1974. That law, as construed by the Supreme Court in Buckley v. Valeo, requires any group that has a ``major purpose'' to influence Federal elections, and spends $1,000 or more to do so, to register with the Federal Election Commission as a ``political committee'' and be subject to the contribution limits, source prohibitions, and reporting requirements that apply to all political committees.
Section 527 groups need to play by the rules that candidates, political parties, and all other political committees are bound by--the rules that Congress has enacted to protect the integrity of our political process. They need to raise and spend money that complies with Federal contribution limits and source prohibitions to pay for ads that promote or attack Federal candidates or otherwise have the purpose to influence Federal elections. They need to spend Federal funds for voter mobilization activities that are conducted on a partisan basis and will influence Federal elections--just like every other political committee.
Some have raised questions about whether it is constitutional to limit contributions to political committees that operate supposedly independent of parties and candidates.
I ask unanimous consent to have printed in the RECORD, Madam President, a detailed analysis of these constitutional questions prepared by Professor Daniel Ortiz, the John Allan Love Professor of Law at the University of Virginia School of Law. The memo thoroughly explains the constitutional basis for the legislation we have introduced.