Press reports quickly described 527 groups as a “loophole” in the Bipartisan Campaign Reform Act of 2002 — sponsored by Arizona Republican John McCain and Wisconsin Democrat Russ Feingold in the Senate, and by Connecticut Republican Christopher Shays and Massachusetts Democrat Marty Meehan in the House.
As Supreme Court Chief Justice William Rehnquist explained, in his dissent from a deplorable 5–4 decision allowing that 2002 law to stand, “All political speech that is not sifted through federal regulation … would be a ‘loophole’ in the current system.” In a system with no such loopholes, free speech would be entirely supplanted by regulated speech.
The 527 organizations date to 1974 and have been required to report contributions and spending to the Internal Revenue Service since July 2000. There is nothing “shadowy” about them.
The Center for Responsive Politics categorizes nearly all 527 groups as ideological — with“Democratic/Liberal” raising $131.5 million so far this year and “Republican/Conservative” raising less than $17 million (www.opensecrets.org). That 8‐to‐1 tilt toward Democratic/liberal 527 contributions makes it ludicrous that Mr. Kerry whined that the Swift Boat Veterans are “funded by hundreds of thousands of dollars from a Republican contributor out of Texas.” Texas homebuilder Bob Perry, who is not a major contributor to the Bush campaign, gave the Swift Boat dissidents $200,000. Two other “large donors” gave $25,000. Even $200,000 would be pocket change for big contributors to Democratic 527 groups, such as insurance executive Peter Lewis or real estate heir and Hollywood playboy/producer Steve Bing, both of whom bankrolled even more hysterical anti‐Bush TV ads than billionaire George Soros.
The largest 527 is the $41.6 million Joint Victory Campaign, whose fourth‐largest contributor ($4.6 million) is Mr. Soros. This is a joint fund‐raising committee run by the second‐largest 527, the Media Fund, and the third‐largest, America Coming Together (which received another $5 million from Mr. Soros).
The next two largest 527 are government employee unions, followed by MoveOn.org, whose main contributor is — you guessed it — Mr. Soros ($2.6 million). Next largest is the New Democrat Network. Its largest contributor is the Media Fund.
The ads of 527 groups on the “wrong” (other) side of any issue undoubtedly annoy affected politicians. But to “shut down all the ads and activity by 527 groups” would be another blatant assault on free speech. Shut down means shut up.
Even if the 527s could be muzzled, people with a strong interest in political issues would soon find other ways to be heard. Resourceful organizations, individuals and foundations can, for example, bankroll biased books, films and studies with transparent political objectives. Will the next “reform” censor biased documentaries and ban partisan books?
Congress has been repeatedly “reforming” campaign finance since 1974. Each reform leaves a “loophole” that supposedly requires another law, which soon reveals yet another method by which people express themselves politically, which requires yet another law, and so on.
Restrictions on individuals boosted fund‐raising by organized political action committees (PACs). Restrictions on PACs boosted “soft money” fund‐raising by political parties. Restrictions on political parties boosted fund‐raising by tax‐exempt 527 organizations.
“Reform” has come to mean political opinion should be confined to opinion journalists, loudmouth entertainers and disingenuous film producers. Everyone else should just shut up.
The 2002 law, for example, actually bans labor unions and corporations from producing TV and radio ads for the last 60 days before an election, although there is no such ban (yet) for PACs or 527 groups.
My first article on campaign reform (or deform) laws appeared in 1974, in the American Spectator, co‐authored by Sam Kazman, now general counsel for the Competitive Enterprise Institute. We argued that protection of incumbents would be the main effect of those initial efforts to limit financing.
Incumbents have such huge advantages over challengers — such as free publicity and the ability to use pork‐barrel spending to lure PAC money — that challengers must spend millions more to have any chance. Limiting the challengers’ access to large individual donors, we predicted, would be a job security program for incumbents. By no coincidence, incumbents were re‐elected 98 percent of the time in the past three congressional races.
Another predictable result of restricting individual contributions was great enhancement of the relative political clout of organized interest groups, including PACs of the Association of Trial Lawyers, the American Federation of Municipal Employees and the American Federation of Teachers.
Congress naturally rigged campaign reform against the little guy and in favor of organized interest groups. Under the 2002 law, individuals can contribute only $2,000 to a candidate, but they can give $5,000 to a PAC, which can then give $5,000 to a candidate. Individuals can also give $35,000 to political parties. Those priorities seem cleverly designed to compel candidates to pander to PACs, party bosses and bundled “individual” gifts from law partners and investment bankers.
Mr. McCain, for example, relied on PACs for 27 percent to 36 percent of his campaign financing in the last two senatorial races. Mr. McCain has raised $2.6 million this year; his opponent only $2,715. Don’t even think about sending the underdog challenger a big check — that’s a federal crime.
Informed voting requires information, and information is not free. If attempts to reduce spending on campaigns ever succeeded, they would result in less informed voters.
As the Supreme Court argued in the 1976 Buckley vs. Valeo case: “A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration and the size of the audience reached. This is because virtually every means of communicating ideas in today’s mass society requires the expenditure of money.”
The 1974–2002 laws ostensibly enacted to take money out of politics have had the opposite effect — tending to exclude everyone but the super‐rich from political communication or political office. As the Center for Responsive Politics reports, “The number of wealthy candidates funding their own campaigns has risen dramatically in recent years.”
The contributions of wealthy candidates to their own campaigns are unlimited, while rivals’ finance sources are handicapped by law. One goal of the 2002 law — shutting down many competing sources of issue ads for 60 days before an election — has ironically shifted power toward the super‐rich financiers of 527 groups. Intentional or not, I predicted this in two columns in the Washington Times on March 22–23, 2001.
I argued, “Campaign finance reform has always been about tilting the balance of political power in one direction or another.” If the McCain‐Feingold bill were enacted, I forecast “courting the influence of media and entertainers would become even more dominant forms of political expression.”
Fantasy filmmaker Michael Moore and his fan Linda Rondstadt have since made me look prescient. I also predicted the new campaign reform law “would tilt the balance of power toward PACs, lobbyists, the media and ‘independent’ advocacy groups … producing issue ads.” Annoyed by the newly enhanced influence of advocacy groups and their issue ads? Can’t say you weren’t warned.
“All versions of campaign finance reform invariably favor some set of organized interests over individual liberty,” I wrote. “That is what this game is all about.”
Restoring free speech and unregulated political competition would be easy. Start by repealing the singularly outrageous 2002 campaign finance law. Then repeal all the others.