Thursday, August 26, 2004

Liberal-leaning groups have dominated the use of an emerging political tool known as a 527, pouring tens of millions of unregulated dollars into efforts to defeat President Bush, but Republicans have ramped up efforts to close the gap before the November election.

“We felt it was imperative that we engage in the debate and help level the playing field to counter what the liberal 527s have done over the past year, beating up President Bush,” said Brian McCabe, president of Progress for America Voter Fund, a 527 that had raised only about $3 million until about six weeks ago.

The group, one of many 527s that have flourished since Congress barred political parties from using unlimited contributions, or “soft money,” from unions, corporations and individuals, now has $35 million in pledges and deposits, and is to start its second anti-Kerry ad buy in Iowa and Wisconsin today.

Mr. McCabe said Republican donors have been “coalescing” around his group in the past few weeks.

Anti-Bush 527s have been a political force this election cycle, with nine of the top ten fund-raising 527s being Democratic or anti-Bush groups, according to the Center for Responsive Politics. Among the top 50 fund-raising 527s, which CRP determined based on Internal Revenue Service records as of Monday, just a handful are working against Democratic presidential nominee Sen. John Kerry.

CRP says three groups — the Media Fund, America Coming Together (ACT) and — have raised a combined $64 million to spend on ads and voter registration and mobilization efforts.

“Democrats as a fact dominate the 527s right now. There’s no question about that,” said Steven Weiss, communications director for CRP. “And Republicans, who initially opposed 527s, are now getting into the game and trying to raise as much money as possible.”

Although 527s have been around for years, they were not exploited until the new campaign finance law in 2002 banned political parties from using soft money. In light of the change, 527s essentially became the outlet for wealthy donors, corporations and labor unions to use their money to influence elections.

“Now the attention has shifted to these outside groups who could have done the same thing before, but weren’t the focus because political parties dominated the process,” said Bob Biersack, a spokesman for the Federal Election Commission.

Republicans had urged the FEC earlier this year to start regulating more of these 527s.

Among the big Democratic donors to 527s, Peter B. Lewis, chairman of the Progressive Corp., individually has given $14.2 million and financier George Soros individually has given $12.6 million to groups such as and ACT, CRP says. The two men top the chart of individual contributors to 527s this year.

Democratic 527 groups such as Media Fund have been running an yearlong barrage of ads criticizing Mr. Bush. also has run such ads, but the group recently has been avoiding the 527 criticism by paying for commercials out of its political action committee, not its 527 branch.

Cleta Mitchell, a Republican election law attorney and opponent of the new campaign finance law, said that even as that law was being crafted, Democrats knew 527s would be the way they could continue using unlimited soft money to influence elections.

Republicans “didn’t realize what the Democrats would be doing” and are playing catch-up, she said.

The tax-exempt 527 groups, which take their name from the section of the tax code that governs them, are not regulated by the FEC unless they have a political action committee, creating the “soft” money loophole. FEC regulation limits campaigns to accepting $2,000 per candidate from an individual annually and PACs to accepting a maximum of $5,000 from an individual annually.

The 527s can accept money from corporations and labor unions, unlike political parties and campaigns. The groups would fall under FEC regulation if it is proven that their major purpose is the election or defeat of a federal candidate or that they expressly advocate the election or defeat of a federal candidate. They also are barred from coordinating efforts with a campaign.

In March, the Bush campaign and the Republican National Committee filed a complaint with the FEC, accusing some anti-Bush 527s of violating these guidelines, including by illegally coordinating efforts with the Kerry campaign.

The issue has hit a fevered pitch in recent days, however, with Mr. Kerry accusing the Bush campaign of illegally working with a 527 group of veterans who have been running anti-Kerry ads questioning the Democrat’s Vietnam record.

Yesterday, a lawyer for Mr. Bush’s campaign resigned because he had been providing legal advice to the veterans’ group, known as Swift Boat Veterans for Truth, a day after the president spoke out against the ads and called for an end to all 527 ads.

Mr. McCabe said his group agrees with the president and would rather have all 527s regulated by the FEC and subject to fund-raising limitations. However, because the FEC chose not to do that this election cycle, Mr. McCabe said, Republican donors have decided to act.

Eli Pariser, executive director of the MoveOn PAC, said the “irony” is that Mr. Bush endorsed and signed the law on campaign finance reform, which clearly allows 527s.

Mr. Pariser said MoveOn would not be hurt by having limits on how much money it could accept from any one person or group, because of its large number of small donors.

Many have argued that even if a 527 isn’t “expressly advocating” for the defeat or election of a candidate in the group’s ads or activities, but is running attack ads, it should be regulated by the FEC.

“Any 527 that runs attack ads … should be regarded as a political committee that has to register with the FEC,” said Michael Toner, a Republican commissioner on the FEC.

For their part, 527s say they are following the letter of the law, and are playing a key role in voter registration and educating the public about the candidates’ stances on key issues.

“The truth is, the work 527s … are doing is very important work,” said Sarah Leonard, spokesman for the Thunder Road Group, a firm started by former Kerry campaign manager Jim Jordan to represent the Media Fund; ACT, which focuses on voter mobilization; and America Votes, a 527 that coordinates the activities of more than 20 Democratic interest groups trying to defeat Mr. Bush.

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