The First Amendment and 527s

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Indiana Rep. Mike Pence, chairman of the Republican Study Committee (RSC), the conservative caucus in the House of Representatives, accused the vast majority of his Republican colleagues and fellow RSC members of going "AWOL" on the First Amendment's provision prohibiting Congress from passing a law "abridging the freedom of speech." What made Mr. Pence's charge so disturbing was its utter accuracy. Moreover, according to Ben Ginsberg, a campaign-finance lawyer involved in Republican politics at the highest levels, the action in the House may have negatively affected GOP electoral prospects this November by sending the wrong signals to prospective Republican contributors.

Mr. Pence's "AWOL" comment referred to the fact that 211 House Republicans voted on Wednesday to drastically curtail the ability of American citizens to exercise their free-speech rights through so-called 527 political committees, whose name derives from the section of the IRS code under which they are organized. By sending the unmistakable signal to Republican donors that 527 organizations are a very big part of America's perceived political problems, Mr. Ginsberg perceptibly noted, House Republicans may be creating the "worst of all worlds" for themselves -- a world in which Democrats continue to energetically contribute to liberal 527s and Republicans remain reluctant to support conservative 527s.

After Congress misguidedly banned national party committees from accepting large, unregulated "soft-money" contributions from wealthy individuals, corporations and labor unions effective after the 2002 election, the money predictably flowed elsewhere. The 527 committees, which are tax-exempt interest groups organized for the purposes of issue advocacy and voter mobilization, became the natural repositories for the soft money that parties were no longer able to accept.

Interestingly, the national political-party committees raised about $500 million in soft money, which was evenly divided between the two parties, during each of the two federal election cycles (1999-2000 and 2001-2002) that preceded the soft-money ban. The Center for Responsive Politics (CRP), a nonpartisan campaign-finance research organization, has calculated that federal-oriented 527 committees spent $479 million during the 2003-2004 cycle, an amount nearly identical to the soft-money totals of the two previous cycles.

In large part because Democratic and other liberal-oriented 527s began their aggressive fund-raising and organizational activities long before Republican-oriented 527s went into serious action during the 2003-2004 period, liberal 527s thoroughly outraised and outspent their conservative counterparts. Nor was Republican fund-raising helped by the fact that the Bush-Cheney re-election campaign was lobbying the Federal Election Commission to radically limit the 527s even as Harold Ickes was raking in seven- and eight-figure contributions to Democratic 527s. CRP data reveal that the net expenditures of 527 interest groups categorized as "Democratic/Liberal" totaled $209 million in the 2003-2004 cycle. That was nearly $100 million more than the $112 million spent by "Republican/Conservative" 527s. The 527s created by labor unions, which customarily direct more than 90 percent of their political spending to Democratic causes and candidates, spent another $105 million, according to the CRP. Other Democratic-leaning 527 categories (environment, human rights and women's issues) spent an additional $35 million. The CRP data closely approximate figures from another watchdog, the Campaign Finance Institute, which has estimated that pro-Democratic 527s spent nearly 80 percent of all 527 money. That was nearly four times what pro-Republican 527s spent.

In their haste to associate themselves with any legislative measure that could be remotely spun to embrace "reform," more than 90 percent of House Republicans, including 85 percent of RSC members, abandoned the same constitutional principles that the vast majority of Republicans had embraced for years in opposing the restrictions on free speech embodied in the various versions of McCain-Feingold campaign-finance legislation. Having been out-hustled by Democrats and other liberals, House Republicans were also undoubtedly motivated by their own perceived financial self-interest, which regrettably trumped their constitutional principles.

Meanwhile, the Bush-Cheney 2004 campaign continues to agitate in federal court against the free-speech rights of the administration's opponents and supporters. President Bush could have saved his party a lot of grief by keeping his 2000 campaign promise to veto McCain-Feingold. Fortunately for the principle of free speech, Senate Democrats, who almost certainly will act as hypocritically as their House colleagues, appear poised to pursue their current financial self-interest by blocking similar legislation in the Senate. Besides, as Mr. Ginsberg cogently observed, why would Democratic leaders give Sen. John McCain, the front-runner for the Republican 2008 presidential nomination, the opportunity to shape the financial and political battlefields for the 2008 election?