Section 527 groups are the latest fashion in campaign finance. Named after a section of the tax code, such groups are allowed to raise and spend as much money as they wish on issue advocacy but are restricted from explicitly supporting a candidate. A 527 group ran an issue ad criticizing Sen. McCain during the New York Republican primary. Perhaps not coincidentally, Sen. McCain has joined the effort by Rep. Lloyd Doggett (D-Texas) to force Section 527s to disclose their membership. In response to all this, the Republican leadership wants to force not only Section 527 groups but also many other nonprofits to disclose their memberships. Congress may vote on these new regulations this week.
Who could be against disclosure? Even people like me who favor a completely deregulated campaign finance system acknowledge the appeal of knowing who gave what to whom. But disclosure also has dangers that are being ignored in the rush to regulate Section 527s.
To understand those dangers we should recall the constitutional values at stake. The framers of our Constitution recognized that Congress should not be given a free hand in regulating the democratic process, because unless restrained, a majority could be tempted to pass laws making it hard for a minority to win elections. The First Amendment ensures the right of citizens to speak and associate freely and thereby participate in robust and competitive elections. In 1976 the Supreme Court correctly recognized that expenditures on political campaigns are protected by the First Amendment, leading the Court to strike down spending restrictions in the Federal Election Campaign Act, passed after Watergate. Regulations that burden participation in elections should be similarly suspect.
Disclosure of supporters can easily encroach on the freedoms of speech and association protected by the First Amendment. In 1956 the state of Alabama tried to force the NAACP to disclose its membership as part of an effort to drive the group from the state. The NAACP's activities were not popular with state officials, and the demand for disclosure was surely a first step toward reprisals against its members. In NAACP v. Alabama, the Supreme Court ruled that such forced disclosures restrained freedom of association. Justice Harlan concluded, "Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs."
Now imagine that you are thinking about contributing to a Section 527 group critical of the vice president. Before sending your money in, you might think hard about the possibility that next year could bring President Gore and a Democratic majority in Congress. What could you expect then? Would you find yourself the target of an IRS audit, as have some critics of President Clinton? Could you completely dismiss the thought that Department of Justice might find reasons for looking into your affairs? Everything we know about government and human nature says those are reasonable fears, concerns that might lead you to keep your contribution to yourself.
Liberals should have similar worries. The anonymous donors who gave the Sierra Club's Section 527 group $4.5 million might wonder if a Republican administration would keep them in mind. The same doubts might occur to contributors to Business Leaders for Sensible Priorities, led by a founder of Ben & Jerry's, or the Peace Voter Fund, set up by the group once known as SANE/Freeze. The history of campaign finance regulation is filled with unintended and perverse consequences, and it would not be surprising if do-gooding through disclosure turned out to be a self-inflicted wound for the left. The most important victim, though, would be everyone's fundamental political freedoms.
Reformers say disclosure and new "reforms" like those in the McCain-Feingold bill will preclude corruption by preventing contributors from buying elections or Congress. Political scientists have known for some time that campaign contributions do neither. In fact, the causality seems to run the other way. In his book "Money for Nothing," Fred S. McChesney notes a subtle danger of big government: Politicians have the power to harm private citizens, and thus by promising not to, can extract campaign funds. In other words, politicians corrupt the private sector, not the other way around. The best campaign finance reform would be to take power away from politicians by reducing the scope of government.
For now, Congress should keep in mind the dangers of disclosure. Current demagoguery notwithstanding, forcing Section 527 groups to reveal their members could threaten basic American values. We all benefit from an open debate about our political differences, and Congress should not try to chill that debate with new limits on our freedoms of speech and association.