The 527 Page

"The 2004 elections will now be a free-for-all."
-Bush-Cheney campaign chairman Marc Racicot
and RNC chairman Ed Gillespie, May 13, 2004 joint statement

Center for Responsive Politics
Center for Public Integrity-Silent Partners
IRS-Political Organization Disclosure(Form 8872's)

BCRA stemmed the flow of soft money to the parties, but those monies quickly found a new channel in the so called "Section 527" political organizations. 527s can engage in voter mobilization efforts, issue advocacy and other activity short of expressly advocating the election or defeat of a federal candidate. There are no limits to how much they can raise. Battles over what 527s could do were being waged as the campaign was progressed.

In Spring 2004 liberal groups such as America Coming Together (ACT) ("mobilizing voters to defeat George W. Bush"), The Media Fund ("media buying organization supporting a progressive message and defending Democrats from attack ads") and MoveOn.org Voter Fund, drawing backing from billionaire George Soros and others (example), engaged in a major efforts that paralleled the campaign of the presumptive Democratic nominee Sen. John Kerry. Republicans protested. When on May 13, 2004 the FEC voted to delay a decision on regulating 527 committees, Republicans vowed to vigorously pursue their own 527 efforts. Groups such as Progress For America Voter Fund and Swift Boat Vets and POWs for Truth were active on the Republican side.

According to the Center for Public Integrity (>), 53 committees focused "largely or exclusively on the presidential election," raising $246 million and spending $248 million. All told "527 committees raised and spent just over a half-billion dollars during the 2003-2004 election cycle."¹

Dec. 2006 Postscript: The punchline did not come until about two years after the election. On December 13, 2006 the FEC announced that it had reached settlements with three of 527s (two LCV 527s, MoveOn.org Voter Fund, and Swiftboat Veterans) to pay penalties totaling about $630,000 for violating the Federal Election Campaign Act.

Timeline
-On March 27, 2002, President Bush signs the Bipartisan Campaign Reform Act of 2002 into law; it takes effect on November 6, 2002.

-On May 2, 2003 a three-judge panel of the U.S. District Court issues ruling on BCRA.

-In a November 18, 2003 letter to the Federal Election Commission seeking an Advisory Opinion, Americans for a Better Country (ABC), a Section 527 committee, requests answers to numerous questions, purportedly in order ensure that its activities comply with the Federal Election Campaign Act of 1971 and the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold). The letter states "ABC wishes to engage in a variety of fundraising and political activities in the 2003-2004 election cycle, culminating in a massive voter mobilization effort emphasizing voter registration and get-out-the-vote ("GOTV") activities. For both fundraising and political purposes, ABC wishes to state in a press release announcing its launch that its purpose is to reelect President Bush and defeat the Democratic nominee."

-On December 10, 2003 the U.S. Supreme Court rules on the Bipartisan Campaign Finance Reform Act of 2002 (McConnell et al. vs. FEC et al.)

-On March 5, 2004 the Republican National Committee sends a letter to 250 station managers around the country informing them that MoveOn.org Voter Fund ads violate federal law.

-On March 10, 2004 the Senate Committee on Rules and Administration holds a hearing "to examine the Scope and Operation of Organizations registered under Section 527 of the Internal Revenue Code."

-On March 31, 2004 Bush-Cheney '04, Inc. and the Republican National Committee announce a complaint with the Federal Election Commission charging that 527 groups and the Kerry campaign are engaging in "a massive conspiracy to corrupt the federal campaign finance system." The 67-page complaint states that "Senator Kerry is now the largest direct beneficiary of illegal soft money in history."

-On April 14-15, 2004 as part of its rulemaking process following passage of BCRA, the FEC holds a public hearing on "whether to amend the definition of 'political committee' applicable to nonconnected committees." The Notice of Proposed Rulemaking was published in the Federal Register on March 11, 2004, and the FEC received a flood of comments during the comment period (through April 9). (MoveOn.org Voter Fund response). In a February 25 communication to the FEC commissioners, Democracy 21, the Campaign Legal Center and the Center for Responsive Politics state that "the existing regulations completely fail to protect against the improper flow of soft money into federal elections through partisand voter mobilization activity of section 527 groups."

-On May 13, 2004 the FEC votes to delay a decision on regulating 527 committees. In a joint statement Bush-Cheney campaign chairman Marc Racicot and RNC chairman Ed Gillespie say the decision "sets the stage for a total meltdown of federal campaign finance regulation in 2004." "The 2004 elections will now be a free-for-all," the two said in their statement. "Conservative groups now have the go-ahead they were waiting for as the commission has now made clear that these '527' groups will not be affected by the federal campaign finance rules, at least in 2004."

-On Sept. 18, 2004 with the elections less than 50 days away, U.S. District Judge Colleen Kollar-Kotelly issues a 157-page opinion in Christopher Shays & Martin Meehan v. FEC. Their complaint, filed on Oct. 8, 2002 and amended on Jan. 21, 2003, charged that the FEC's regulations "thwart and undermine the language and congressional purposes of Titles I and II of BCRA." Judge Kollar-Kotelly agreed with Shays and Meehan on many points.

Notes
1. Center for Public Integrity. "527s in 2004 Shatter Previous Records for Political Fundraising." December 16, 2004.

Americans Coming Together and The Media Fund are the most prominent
of the Democratic leaning Section 527s.