Campaign Funding Battle Rages Anew Over House Bill

In a postscript to the recent congressional debate on campaign finance reform, a sharp battle broke out in the House on Tuesday over legislation to ease financial reporting requirements for a range of nonprofit groups active in politics.

The dispute followed release of a study earlier in the day that found that 25 nonprofits, spanning the political spectrum, have quietly raised more than $67 million in less than two years to influence elections for federal offices.

Such money-raising prowess by outside groups has gained attention since the enactment last month of strict fund-raising limits on national political parties that will take effect later this year.

Today, the House is scheduled to vote on a proposal backed by Republican leaders that would exempt some of the politically active nonprofit groups from requirements that they detail their contributions and spending to the Internal Revenue Service.

The GOP leaders, in Tuesday’s heated exchange, said the exempted groups would still be required to disclose their financial backers to state authorities.

For many of the state and local groups that are not active in national politics, the IRS reporting requirement is a burden that merely produces “mounds and mounds of useless paper,” said Rep. David Vitter (R-La.).

But critics denounced the measure as a potential conduit to allow unlimited donations known as soft money into the political system without effective public scrutiny. The newly enacted law prohibits national parties and candidates for federal office from raising or spending such money after next fall’s congressional elections.

“It just goes to show you that you can deadbolt the front door, but reform opponents will always try to sneak their money in the back window,” said Rep. Lloyd Doggett (D-Texas), an opponent of the measure.

The provision is part of an otherwise noncontroversial bill to grant taxpayers certain safeguards against excessive penalties and to extend by 15 days--until April 30--the deadline for taxpayers who file electronic returns.

Today’s vote could be close, because Republican leaders are using parliamentary procedures that require a two-thirds majority for passage of the bill, wanting to act quickly as the April 15 tax deadline approaches. But that means significant opposition from Democrats over the exemption provision would sink the bill.

Rep. Charles B. Rangel of New York, the top Democrat on the House Ways and Means Committee, signaled that his party was ready to do just that to thwart the exemption provision.

Also opposing the provision is Rep. Martin T. Meehan (D-Mass.), a co-sponsor of the just-enacted campaign law. “We shouldn’t be taking steps backward after taking major steps forward.”

Republican leaders said that if Democrats chose to defeat the entire bill over the exemption provision, they would have to live with the political consequences. “Let them make their vote and go ahead and explain it to the people,” House Majority Leader Dick Armey (R-Texas) told reporters.

The new twist in the campaign finance debate brought a spotlight to groups that in recent years have flexed their political muscles in ways that have drawn little public notice.

The study released Tuesday by Public Citizen, titled “Deja Vu Soft Money,” concluded that these independent groups, tax-exempt under Section 527 of the tax code, appear well-positioned to do what will soon be forbidden for the national parties: raising and spending soft money.

The study was the first comprehensive look at the political activities of the so-called 527 groups since they were required by law two years ago to disclose their political contributions and expenditures.

The new campaign law, said Public Citizen President Joan Claybrook, “will be undermined if this river of [soft] money is simply diverted to shadowy and highly partisan [nonprofit] groups.”

Public Citizen, founded by Ralph Nader 30 years ago, is a watchdog group based in Washington that generally advocates liberal or consumer-oriented government reforms.

Of the $67.3 million collected by the 25 most active 527 political groups during the second half of 2000 and in 2001, the report found that most of the money went to highly partisan or ideological groups. The largest, Pro Choice Vote, collected $12.3 million, most of it from actress Jane Fonda, to support abortion rights.

The American Federation of State, County and Municipal Employees, a labor union that actively supports Democrats, was the second-largest collector, with $9.4 million.

A group called the Republican Leadership Council collected $3.9 million, and the Club for Growth, a conservative anti-tax group, collected $2.7 million.

The report found that the money the 25 groups raised was comparable to what some national party committees were raising and spending to elect congressional candidates.

The new campaign law will prohibit certain political advertisements by the nonprofits and other groups during the weeks close to an election. But other political activities will still be allowed.