McCain, Feingold Aim to Shut Huge Campaign Law Loophole

The authors of the sweeping 2002 campaign finance reform law, who designed it to limit the influence of money in politics, proposed Wednesday to close what had become a gaping loophole.

Sens. John McCain (R-Ariz.) and Russell D. Feingold (D-Wis.) introduced legislation to rein in groups independent of political parties that derive their power from Section 527 of the tax code. The bill would force “527s,” as these groups are known, to register as political committees, limit the funds they accepted from any one source and refuse contributions from corporations and unions.

The 527 groups are responsible for some of the most controversial ads of the presidential campaign, including commercials attacking Sen. John F. Kerry’s record in Vietnam and President Bush’s National Guard service.

In May, the Federal Election Commission, which interprets and enforces election laws, voted not to restrict 527s like other political committees. The ruling spurred a rash of fundraising and spending by the groups. They are allowed to accept unlimited funds from individuals but may not coordinate their activities with political parties or candidates.

“McCain-Feingold has not failed,” said McCain. “But the Federal Election Commission has chosen not to enforce the law.”

“This year the FEC looked the other way while 527s have played by their own rules, evading the campaign finance laws, flooding the airwaves with attack ads,” added Rep. Christopher Shays (R-Conn.), who along with Rep. Martin Meehan (D-Mass.) has introduced a similar bill in the House.

The 527s had spent about $248 million on the election as of late August, according to the nonpartisan Center for Responsive Politics, which tracks campaign spending. McCain criticized the FEC on Wednesday, calling its behavior “beyond bizarre” and its attempts to interpret the intent of Congress “Orwellian.”

FEC Chairman Bradley A. Smith, a Republican, called McCain’s comments “unbecoming of a senator” and defended the commission’s rulings.

“The law as it was written very clearly did not cover 527s,” he said. “I’m pleased that he and his colleagues have decided to use the proper route to change the law -- with legislation rather than by regulatory fiat.”

Larry Noble, executive director of the Center for Responsive Politics and former FEC general counsel, said the “problem right now is that these 527s, which look and smell like political committees, are not being treated as such.”

Jim Jordan, spokesman for America Coming Together, a Democratic 527, said the debate over the group’s status had forced them to move carefully.

“Suffice to say that the ground we’ve been operating on has been soft and the guidance has been murky,” he said “We’ve behaved very cautiously and with the advice of lawyers.”

The reformers have also turned to the courts to force the hand of the FEC. Last week, Shays and Meehan filed suit asking a federal judge in Washington to make the FEC revisit the issue.

Shays said he expected the court to rule before Congress had a chance to take up the legislation. The lawmakers said they did not expect the bill to be taken up until after the November election.