Study Looks at Independent 527s in 2004 Election - February 22, 2005 Vol.6, No.4

February 22, 2005 Vol.6, No.4:

Published: 02/22/2005

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An analysis of the study can be found on the More Soft Money Hard Law website sponsored by election attorney Bob Bauer.

The law firm of Lichtman, Trister & Ross has published a summary of the proposed 527 Reform Act of 2005.

Study Looks at Independent 527s in 2004 Election

The Campaign Finance Institute has published a draft chapter of its upcoming book, Election After Reform: Money, Politics and the Bipartisan Campaign Reform Act, that examines the role of independent 527 groups in the 2004 election. It finds these groups did not replace party soft money, since overall levels of soft money went down in 2004. It also said independent groups overall were “scrupulous” in following the law banning coordination with candidates and parties. The study poses questions that should be carefully examined before Congress moves to regulate this independent political activity.

Authors Steve Weissman and Ruth Hassan found $591 million in soft money spent before passage of the Bipartisan Campaign Reform Act of 2002 (BCRA), but a decrease to $337 million after the law took effect. This more than offset the $254 million raised by independent 527s. The authors reject the view put forward by Sens. John McCain (R-AZ) and Russell Feingold (D-WI), sponsors of the 527 Reform Act of 2005, that these groups acted illegally in 2004, saying, “Although parties and campaigns and their close associates helped foster major 527 groups, there is no available evidence that they did anything illegal. On the contrary, the individuals involved in supporting the 527s appear to have been rather scrupulous in following the letter of the law and its regulations, which forbade parties, candidates and their agents after Nov. 6, 2002 from requesting or spending soft money in federal elections.”

The study notes the role of parties in helping form 527s in the 2004 election, but also says key supporters took steps to separate themselves from the parties and “seem to have refrained from coordinating their communications with political campaigns.” Weissman and Hassan go on to say, “After all, the 527s are not making contributions to candidates or parties, nor are they coordinating their spending with them. And many of the donors are promoting their ideologies rather than looking for individual favors. Aren’t the 527 donors simply furthering independent political expression?”

The study raises three additional policy questions to be examined in policy debates on what threat of corruption independent 527 groups may represent:

Would money raised and spent by 527 groups create a feeling of obligation by candidates that become officeholders?
Should there be special treatment of groups that have both regulated PACs that can make direct contributions to campaigns and independent arms that do not coordinate or communicate with campaigns?
Do individuals closely associated with campaigns and party leaders that are involved with independent 527s pose a threat of corruption?

This study is a good beginning for discussion and debate on whether independent 527 groups should be regulated in the same way as parties and campaigns. Independent groups that do not coordinate with candidates and parties currently are subject to disclosure rules, filing reports with the Internal Revenue Service.