Thursday, May 20, 2004

The chairman of the Committee on House Administration, during a hearing yesterday with members of the Federal Elections Commission, called the campaign finance reform act of 2002 a “failure” that has cluttered the political process.

Rep. Bob Ney, Ohio Republican, said the FEC shouldn’t be criticized for delaying regulations for private, political nonprofit organizations because the laws surrounding them are confusing, even to lawmakers.

“As I pointed out repeatedly during the floor debate, the [Bipartisan Campaign Reform Act] does not ban soft money notwithstanding repetitive claims to the contrary. … Nevertheless, we’re now stuck with complex and convoluted law,” Mr. Ney said.

Four members from the FEC defended their decision to delay further fund-raising regulations until after the November elections. The decision angered some House Republicans, especially those who wrote the reform legislation.

The commissioners — two who favored regulations and two who did not — said there were more problems than solutions in a proposal to restrain political organizations known as 527 nonprofits, named for the section of the IRS code that covers them.

Rep. John B. Larson, Connecticut Democrat, said he was concerned that FEC regulations for 527s could lead group organizers to refile file under 501(c)3 or 501(c)4 nonprofit organization status with the Internal Revenue Service, which has disclosure requirements.

“And that would have the effect of making soft money invisible,” Mr. Larson said.

That was the major concern that led to the FEC’s decision not to regulate the groups for this election cycle, Commissioner Ellen Weintraub said.

The 527s disclose all contributions more than $5,000 in a year to the IRS, but their intake is not capped under any campaign finance laws, FEC Chairman Bradley A. Smith said.

“I have never seen so much excitement in a decision that maintains the status quo, and that is exactly what we did,” Mr. Smith said.

He added that members of Congress knew the definitions of “political committees” and “expenditures” when they passed reform legislation in 2002 and failed to include 527s or any other private, nonprofit political organizations in the law.

The authors of the legislation, Sens. John McCain, Arizona Republican, and Russell D. Feingold, Wisconsin Democrat, wanted the 527s included.

“The FEC was absolutely right in its decision,” said Rep. John T. Doolittle, California Republican. “But they didn’t have enough votes to pass the horrid law in both houses and they thought [the FEC] would be stupid enough to use a letter from a hundred or so representatives and conclude that it was Congress’ intent.”

Mr. Doolittle said any other action by the FEC would have been overstepping its authority.

Commissioner Michael E. Toner said the law was so confusing that the U.S. Supreme Court changed it.

Mr. Toner was referring to the high court’s 2003 ruling on a lawsuit against the FEC filed by Sen. Mitch McConnell, Kentucky Republican. The court said political groups that have a major purpose of influencing federal elections and buy advertisements or create literature expressing advocacy or opposition for specific candidates should be regulated.

But Mr. Smith said the FEC cannot rely on the Supreme Court as a nonregulatory branch of government to create restrictions on political groups that later may be found unconstitutional.

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