Are new campaign finance regulations an attack on free speech?

Recently there has been an uproar from liberal nonprofit organizations over possible new Federal Election Committee (FEC) rules that would regulate some organizations' efforts to air anti-Bush ads during this election year. The regulations are aimed at independent political committees--section 527 groups.

Republicans see this as a chance to shut off one source of Democratic campaign funds and thereby improve Republican chances for victory in November--and Democrats are aggressively challenging the proposed rules for the same reason.

Those in the campaign finance reform community see this as a rare opportunity to gain the cooperation of the party in power to bring about greater scrutiny and control of election money flow. If unchecked, the existing loophole would continue to give the wealthy a louder voice during the election cycle, and render our democratic process one where the average American is disregarded in favor of wealthy special interests.

Paradoxically, many progressive organizations which traditionally support small "d" democracy and campaign finance reform are asking the FEC to scrap or postpone the proposed rules. Humanist allies including People for the American Way, the Alliance for Justice, and the Sierra Club have all issued statements against the proposed rules. Potentially misleading alerts have circulated from these and other organizations that suggest the FEC is trying to ban all nonprofits from criticizing Bush and members of Congress.

Both sides of this debate agree that the primary target of these new rules is actually 527 organizations like the liberal MoveOn.org and the conservative Club for Growth, not 501(c)3s like the American Humanist Association and Americans United for Separation of Church and State.

People for the American Way accurately defines a 527 as an

   organization that is allowed
   to collect unlimited contributions,
   without disclosing
   donors' names, to run "issue
   ad" campaigns during elections....
   527 groups do not
   have to disclose their identity
   or reveal their activities to
   the IRS or the FEC. Given the
   fact that contributions are
   unlimited, the spending by
   the 527 is far larger than that
   of the PAC [Political Action
   Committee], though specific
   finances are hard to trace.

Contributions to 527s, as opposed to 501(c)3s, are not tax deductible on account of their partisan nature.

The extent of the rules is where the debate starts. These 527s and their allies are saying that the rules will stifle free speech. Alliance for Justice legal council Tim Mooney said in a telephone interview that it "could even ban nonpartisan voter registration activities, and nonprofit research reports that happen to be critical of a candidate." He also suggested that if the FEC tightens the language to specifically exempt 501(c)3s (as they are expected to do), there will be another problem. By defining what 527s do as influencing elections it paints issue ads and other potentially nonpartisan activities as partisan, thereby laying the groundwork for similar rules that specifically limit 501(c)3s down the road.

But Larry Noble, executive director of the Center for Responsive Politics, said in a telephone interview that such fears are unwarranted, and that "there's no proof of a slippery slope being created" The FEC's interest in specifically curbing 527s in order to protect the interests of the average voter is not intended to be a burden on 501(c)3s.

A close read of the FEC rules supports Nobles assertions. The bulk of the FEC rules apply only to "political committees," which they define as groups "the major purpose of which is the nomination or election of a candidate." (See the FEC document yourself at http://www.fec.gov/pdf/nprm/ political_comm_status/04-5290.pdf) Since 501(c)3 status involves an absolute prohibition on such activities, this automatically excludes organizations with that classification from the rule--assuming they are operating within existing law.

Fred Wertheimer, president of Democracy 21, takes an objective approach, saying in a telephone interview that "501(c) groups have some legitimate concerns." He explained that the "FEC rulemaking includes some provisions that affect 501(c) groups, which is wrong and over broad." But Wertheimer said such provisions won't withstand court review because they overstep the FEC's authority, and groups trying to block any action on needed restrictions on 527s are overstepping. He added:

   This stance moves the groups
   organizing the 501(c) efforts
   beyond the very legitimate
   goal of protecting the free
   speech rights of 501(c)
   groups to the very inappropriate
   goal of giving section
   527 groups immunity from
   complying with the nation's
   campaign finance laws.

In an April 2, 2004 letter sent to their congressional colleagues, Senators John McCain (Republican, Arizona) and Russ Feingold (Democrat, Wisconsin) referred to the 501(c) campaign against any FEC rulemaking as a "campaign of misinformation," writing:

   We are greatly concerned
   that the 501(c) issue is simply
   being used as cover in an
   effort to derail the FEC's
   review of 527 political activity.
   Many of those who are
   raising an alarm about the
   effect of the FEC's rulemaking
   on 501(c) nonprofit
   organizations would like you
   to believe that the only way
   to prevent the restrictions
   they fear is for the FEC to
   take no action at all. This
   would be a serious mistake.
   We continue to believe that
   the FEC should address
   the activities of 527 groups
   this election year on an expedited
   basis.

If the FEC implements a tightened version of these rules, it won't silence groups. Rather, it will force them to play by the rules. Instead of accepting multimillion-dollar contributions to elect the candidate of their choice they'd be limited to accepting $5,000 per individual. They'd also have to report their activities instead of keeping them veiled under secrecy. This is a good thing.

So then, why would those organizations known for exposing dirty politics and concealed truths overstate reality on this issue? Well, the strategy of overemphasizing the dangers of the new FEC rules maybe an effective way of criticizing Bush and preserving money to defeat him in the form of 527 electoral workhorses.

Unfortunately, such a Machiavellian technique is not only ethically questionable but it may result in unintended consequences. Noble says that groups crying wolf over this rule "are motivated by political interest," but this political interest isn't very farsighted. If 527s aren't stopped now, the Republicans will be sure to catch on to them by the next election and use them better than the Democrats ever hoped to, since it's no new revelation that the Republican Party has more deep-pocketed supporters than the Democrats.

Modern elections are often decided by donations from wealthy corporations and individuals, funneled in various ways into advertisements and other highly targeted partisan activities. Campaign finance reform advocates believe such expenditures should be tracked and regulated in order to work toward fair elections where every vote really does count and where the voices of the rich don't drown out those citizens of more modest means.

The FEC measure explicitly challenges the money laundering by which funds are directed into 527s by people and corporations seeking to influence elections without abiding by legal disclosure and quantity limits. The FEC is expected to finalize the rules in May, but this will only happen if lobby groups don't manage to convince the department to postpone or scrap the plans. Delaying the decision on the 527 election loophole to a future year is counter to reform efforts, since there's no guarantee that the political powers that be will again be ready to allow such progress.

Roy Speckhardt is director of membership and programs for the American Humanist Association.