Congress pushes to close loophole

The chief architects of the 2002 campaign finance overhaul introduced a bill yesterday to clamp down on so-called “527 organizations” such as MoveOn.org and the Swift Boat Veterans, which flooded the broadcast airwaves with political commercials last year.

Sen. John McCain, Arizona Republican, and the group of lawmakers with whom he teamed to pass the 2002 Bipartisan Campaign Reform Act, said the bill would close the 527 organization loophole, which they had not intended to allow.

The measure has attracted support both from those who pushed the 2002 law and those who opposed it, such as Sen. Trent Lott, Mississippi Republican and chairman of the Senate Rules Committee, which has jurisdiction over the measure.

“I’m not in my natural habitat with this group,” Mr. Lott said yesterday as he stood with Mr. McCain and other supporters of the campaign finance reform act.

Mr. Lott said he realizes that law won’t change anytime soon but that everyone should play by the same rules, which means tax-exempt 527 groups that want to influence federal elections should be subject to the same regulations as political committees.

“This issue, if we don’t address it, is going to be a huge political calamity in America,” Mr. Lott said, calling 527 funding “sewer money.”

Mr. McCain and his supporters had tried to crack down on “soft money,” the uncapped donations to political parties and interest groups that often were spent on ads that came close to calling for the election or defeat of a candidate, but never crossed that explicit line. That bill targeted political parties and committees.

Interest groups got around the 2002 law by setting up tax-exempt groups, known as 527s because of the part of tax code that governs them. The groups fall outside campaign finance laws because they are not political committees.

Last fall’s ads by MoveOn.org and the Swift Boat Veterans for Truth were usually from 527s.

Mr. McCain and Mr. Lott’s new bill would require that any 527 organization that campaigns in a federal election obey the same rules as other political committees, which means severe restrictions on soft money.

Officials at two leading 527s, MoveOn.org from the liberal side and Progress for America from the conservative side, did not return calls for comment yesterday.

Mr. McCain said lawmakers should support the bill out of self-interest, because it would prevent a rich activist from trying to defeat an incumbent by directing money into a political race through a 527 organization.

“That should alarm every federally elected member of Congress,” he said.

Rep. Christopher Shays, Connecticut Republican and a chief House sponsor, said he thinks President Bush will be supportive, and he recalled the past two times he has met the president: “The first thing he said was, ‘Shays, when are you going to fix this 527 problem?’ And I said, ‘Senator McCain will take care of it.’”

The main test will be among House Republican leaders.

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