Senate Approves Campaign Donor Disclosure Measure

The Senate, pushed by former Republican presidential candidate John McCain, approved a measure Thursday that would force stealth political committees to disclose their donors and expenditures.

The election-year action--the first time since 1993 that the Senate has approved a campaign finance reform measure--targeted the newly popular, tax-exempt “527” committees, ideological and issue-oriented groups that have begun raising hundreds of millions of dollars from secret sources to influence congressional and presidential races.

The issue now goes to the House, where a similar measure could be approved as early as today, congressional aides said.

Capitalizing on a popular mandate from his presidential campaign, McCain offered a proposal that a majority of his colleagues, some of them in tight reelection battles, could not refuse.

The magic of the measure, McCain and his co-sponsors said after the vote, was its narrow focus. All it would require is public disclosure--something both Republicans and Democrats uniformly claim to support--of donors and expenditures.

Fourteen Republicans joined all but two Democratic senators to defy the Senate’s GOP majority in a 57-to-42 preliminary vote. McCain’s amendment to the defense authorization bill subsequently was approved by voice vote.

McCain and other sponsors of the measure, who have battled unsuccessfully for campaign finance reform for years, heralded the vote as the first step in reining in a campaign finance system that they say has been fundamentally corrupted by huge unregulated donations and secret money.

“It’s a little like New Hampshire,” McCain said after the vote, referring to his first GOP primary win. “We need confetti.”

McCain Credits Public Pressure for Victory

McCain, whose face lit up with a Cheshire cat grin as the votes came in, gave credit to his millions of supporters in the primaries and the clear message they sent to Republicans up for reelection. The senator’s Democratic partners agreed that public pressure was key to the vote.

“Let me say, as a Democrat, there’s no question that John McCain’s campaign had a lot to do with this,” said Sen. Russell D. Feingold (D-Wis.), the Senate minority’s leading advocate of campaign finance reform.

The amendment’s sponsors said that the vote represented a tidal shift in the years-long effort for campaign finance reform. In previous years, the House has passed campaign finance measures, but the bills have died in the Senate.

The House already had narrowly rejected a measure similar to McCain’s. But Thursday’s Senate vote will clearly put pressure on some lawmakers to change their votes, House aides and Senate sponsors said.

The Republican senators who voted against their leadership included moderates in the GOP caucus plus a number of more conservative senators facing reelection. Among them were Sens. Conrad R. Burns of Montana, Kay Bailey Hutchison of Texas, Spencer Abraham of Michigan and Mike DeWine of Ohio.

The measure was particularly difficult for Republicans to reject because it calls for exactly the kind of campaign finance reform that they have long publicly advocated: disclosure.

Larry Akey, spokesman for Burns, said that the senator defected from the GOP leadership position because he has “long believed in lightbulbs and sunshine in American politics.”

Earlier in the day, however, it looked as if the amendment would fail.

Several Republican senators spoke on the floor, endorsing the principle of the McCain amendment while explaining that they would oppose it because it could endanger the bill to which it was attached.

Sen. John W. Warner (R-Va.), chairman of the Senate Armed Services Committee, stressed his support for what the measure would do but added: “This amendment will torpedo this bill and send it to the bottom of the sea where only Davy Jones could resurrect it.”

An outraged McCain challenged his colleagues’ rationale, calling it a “red herring.”

Just before the vote, Senate Majority Leader Trent Lott (R-Miss.) urged senators to strike the amendment from the larger bill.

Ultimately, however, even some of the most loyal members of Lott’s caucus deserted him.

During a two-hour debate, McCain and other supporters of the amendment railed against the 527 committees, named for a section of the federal tax code.

“These organizations are the new stealth players in our electoral system,” Feingold said. “The combination of money, politics and secrecy is a dangerous invitation to scandal.”

McCain, referring to the 1996 campaign finance scandals, said that the secrecy surrounding donors to 527 committees would allow “Mafia money, drug money, Chinese money” to influence American elections.

Sen. Joseph I. Lieberman (D-Conn.) accused the groups of engaging in “mockery.” They claim to the Internal Revenue Service that they are political committees, he said, therefore winning tax-exempt status, while arguing to the Federal Election Commission that they are not political committees and should not have to declare their donors or their expenditures.

Section 527 of the tax code states that groups can claim tax-exempt status only if they are “organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for . . . influencing or attempting to influence the selection, nomination, election or appointment of an individual to a federal, state or local public office or office in a political organization.”

The 527 organizations argue, however, that they are not required to report to the FEC because they do not expressly advocate the election or defeat of a particular candidate.

Liberal Groups the First to Use Loophole

Liberal groups like the Sierra Club pioneered the practice in 1996. In the current election cycle, conservative and Republican groups appear to be using the 527 loophole the most aggressively.

Although the GOP-oriented 527s stress that they are only following the example of Democratic-leaning groups, on Thursday, GOP senators railed against McCain’s proposal as a clear effort to upset the balance of power by passing a reform that would hurt Republicans more than Democrats.

“Let’s talk honestly with the public,” said Sen. Rick Santorum (R-Pa.). “We’re killing the American political process by picking winners and losers.”

None of the senators who took the floor Thursday defended the 527 committees’ right to secrecy. But some of their organizers claim they have the same right that the National Assn. for the Advancement of Colored People has not to disclose their members.

“I have a philosophical opposition to opening up people to retaliation from government officials when they raise issues and petition the government for change,” said Karl Gallant, chairman of Republican Majority Issues Committee, a leading 527 group.

Scott Reed, chairman of another 527 working to sustain the GOP majority in Congress, explained why his group likes the secrecy: “It helps with some donors. Some donors don’t like reading about their contributions in the newspaper and having them splashed across the television.”

Gregory Colvin, a lawyer who pioneered use of the loophole and whose firm is advising about a dozen 527s, said he believes that the “desire for secrecy is a minor factor” in his clients’ decisions to set up 527s. However, his clients highly value the ease of not having to report, and many likely would give up their tax-exempt status to avoid the complication of disclosure.

“I think it will make them less popular,” Colvin said. “What will most likely happen is the whole phenomenon will go underground.”

Vice President Al Gore, the Democrats’ presumptive presidential nominee, said that he agrees with McCain about closing the 527 loophole, calling the groups’ secrecy “outrageous.”

Texas Gov. George W. Bush, the likely GOP nominee, has not publicly expressed a position on the particulars of McCain’s effort. Bush spokeswoman Karen Hughes said he believes groups that run issue ads during campaigns “should have to disclose who is paying for them.”