House Backs Disclosure of Secret Donors

The House unexpectedly passed legislation early this morning to require the disclosure of secret donors and expenditures by tax-exempt political committees, clearing the way for Congress to pass substantive campaign finance reform for the first time in a quarter century.

The surprising 385-to-39 approval of the reform measure capped weeks of negotiations and changes in the legislation by some House Republican leaders intended to derail it. Indeed, just hours before the vote, GOP leaders were planning to submit a counterproposal to the House that, because it would have required disclosure by a broad array of groups, would have been destined to die.

In the end, however, the limited focus of the legislation and the reality of election-year politics made it difficult for lawmakers to go on record in support of such political activity.

“Members have a sense that this is an issue people are concerned about and that they have to be responsive to when they go on the record,” said Fred Wertheimer, a longtime advocate of campaign finance reform.

Despite the lopsided vote, the circumstances surrounding it--a brief but contentious midnight debate, last-minute bargaining and a parliamentary maneuver requiring a two-thirds’ majority vote for passage--made it clear that the House had not been swept with reform fever.

“I believe this represents one small triumph of democracy over secrecy,” said Rep. Lloyd Doggett of Texas, the chief Democratic advocate for the measure.

All 39 lawmakers who voted against the legislation were Republicans. California lawmakers voting against it were Reps. John T. Doolittle of Rocklin, Wally Herger of Marysville, Jerry Lewis of Redlands, Richard W. Pombo of Tracy, George P. Radanovich of Mariposa and William M. Thomas of Bakersfield.

The passage all but assures that Congress will send a bill to the president. The House measure closely resembles a Senate version passed earlier this month. Because of parliamentary rules, however, the Senate will have to vote again on the legislation.

Both versions target “527 committees,” ideological and issue-oriented groups, named for a section of the tax code, that are raising hundreds of millions of dollars from secret sources to influence congressional and presidential races in November.

Reformers see the 527 groups as flouting a particularly egregious loophole in campaign finance regulations. Unlike political parties and political action committees, they have been free to take donations from anyone and have not been required to disclose where they get their funds or how they spend their money.

Under the House measure, the organizations must disclose the identities of donors who contribute $200 or more as well as expenditures of more than $500 used to influence an election.

Failure to disclose would be penalized by fines of 35% of the violating contribution or expenditure to the Internal Revenue Service.

The disclosure measure was much more limited than the sweeping ban on unregulated “soft money” donations that the House passed last year, but reform advocates hailed it as a first step toward breaking the massive political shield that has protected the current campaign finance system.

The measure passed, congressional observers said, because its goals were narrowly focused and limited to the kind of campaign finance reform that Republicans have always said they believed in: disclosure.

“I hope we can all agree that voters have the right to know who is paying for any campaign ad and who is trying to influence their vote,” said Rep. Michael N. Castle (R-Del.).

The alternative measure pushed by the House GOP leadership--which also would have required not-for-profit associations, labor unions, corporations and other groups to disclose their political contributions and spending--was opposed by reform advocates from both parties and by many key conservative constituencies, such as the Right to Life anti-abortion group.

In the end, reform opponents “got tangled up in a knot, and they had no more moves,” Wertheimer said.

Some GOP leaders were enraged that they were forced to permit a vote on the 527 measure. They did not go down without a fight.

Rep. John R. Kasich (R-Ohio) said that he was voting for the measure but called it a “sham” because it would not require disclosure of electioneering efforts by labor unions, the Chamber of Commerce and other not-for-profit organizations.

At least two members of the leadership, Majority Whip Tom DeLay (R-Texas) and J.C. Watts Jr. of Oklahoma, the Republican conference chairman, have close ties to 527s.

DeLay called the measure “a clear violation of the 1st Amendment.”

“Again and again, the courts have upheld the right of groups to participate in the political process while retaining privacy for their members,” DeLay said. “I am therefore confident that the courts will quickly and decisively strike down this legislation.”

And he added: “How will the Democrats explain to their constituents that any American who supports these issue-advocacy groups could find his or her name on a government list? This lack of privacy and free speech is chilling.”

Doggett was pleased with what he called a “moderate” victory but expressed disgust at the maneuvering by the GOP leadership. “It has just been one high-handed tactic after another.”

Rep. Jim McDermott (D-Wash.) declared: “Disclosure is done in the middle of the night. It’s kind of an irony.”

Passage followed a determined effort by the GOP House leadership to doom the measure.

“It’s pretty obvious that some Republicans and Democrats alike do not even want to see full disclosure,” Sen. John McCain (R-Ariz.) said earlier in the day as maneuvering over the measure was in full swing.

“For years they hid behind the slogan of full disclosure. But when it comes to [this measure], they’re not interested.” McCain was chief sponsor of the Senate version of the legislation.

The GOP leadership’s opposition to the measure--even in an election year--shows just how valuable these committees are to some members.

“This is a wonderful vehicle to affect political campaigns,” McCain said. “You can get all this money and nobody has to know who gave it. I can see why they would want [the reform measure] to be killed.”

Two weeks ago, one 527 group, the Republican Majority Issues Committee, began running ads designed to convince voters in the Long Island, N.Y., district of Democratic Rep. Michael P. Forbes that they should vote against him because, in essence, he once was a good Republican. Forbes switched his party registration last year.

The group, whose chief fund-raiser is DeLay, refused to reveal its donors or how much it would spend on the anti-Forbes campaign but said that it would spend an average of about $1 million each in as many as two dozen hotly contested congressional districts around the country.

Earlier this year, McCain’s presidential campaign was targeted by another 527 group. In the final days before New York’s primary vote, Republicans for Clean Air spent $2.5 million on commercials that praised Texas Gov. George W. Bush’s environmental policies while attacking McCain’s views.

McCain used a procedural trick of his own to win consideration of the Senate measure as part of an unrelated bill. When it passed--on a voice vote--it was the first campaign finance reform measure to clear the Senate since 1993.

Wertheimer deemed the Republican version “designed to die” because it targeted the political activities of labor unions, which primarily support Democrats, while ignoring the political activities of corporations, which support more Republicans than Democrats.

Under the IRS code, groups can claim tax-exempt status 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.”

However, under election laws, these groups argue that they do not have to disclose their donors or their expenditures because they do not expressly advocate the election or defeat of a particular candidate.

Opponents worry that secrecy enables the groups to serve as conduits for money from corporations and individuals--American or foreign--who might not want to be viewed as politically active or identified with a particular issue or candidate. It also can leave voters in the dark about the forces behind television ads and other efforts to influence their ballot-box decisions.

Theoretically, a wealthy Chinese businessman could finance millions of dollars in advertisements through such a group to promote a member of Congress who voted for the China trade bill.