[Congressional Record Volume 150, Number 66 (Wednesday, May 12, 2004)]
[Senate]
[Pages S5363-S5364]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROPOSED 90-DAY DELAY IN FEC RULEMAKING
Mr. McCAIN. Mr. President, I am joined on the floor today by my good
friend from Wisconsin, Senator Feingold, to speak briefly about a
recent recommendation by the general counsel of the Federal Election
Commission, FEC, to delay the 527 rulemaking another 90 days.
Additionally, we would like to express support for an excellent
bipartisan proposal by two members of the FEC to resolve the issue of
527 groups spending illegal soft money to influence Federal elections.
As my colleagues know, the problem of 527 groups raising and spending
soft money has somehow become a very contentious and partisan issue.
That is unfortunate, because it need not be, and the Toner/Thomas
proposal proves the point.
As my colleagues know, the general counsel of the FEC made a
recommendation yesterday to delay the 527 rulemaking which the
commission is to rule on tomorrow. This is a terrible idea. There is
simply no reason for the commission to continue fiddling while Rome
burns. The commissioners need to decide the 527 issue tomorrow, on
schedule, without more pointless delays. Everyday, 527 groups whose
purpose is to influence the presidential election are breaking the law.
They are spending millions of dollars in soft money to influence
Federal elections in plain violation of the Federal Election Campaign
Act of 1974, which the commission has failed to enforce for a
generation. And these groups are now using the FEC inaction to blow a
hole in the soft money ban upheld by the Supreme Court.
In the middle of an election cycle, the FEC is considering taking a
pass on the most critical issue on its plate. If they do, it will be
just one more example of the agency's utter inability to enforce
election law. My colleague, Trent Lott, recently said he was
considering hearings on FEC reform, and if this absurd delay happens, I
think we may be talking about hearings sooner rather than later. The
FEC is responsible for the start of soft money in the first place. They
must not get away with it again.
This is particularly galling because the main reason the general
counsel office gives for its delay--the size and complexity of the
rulemaking, and the possible impact on 501(c) organizations--is a
canard. There is an excellent, bipartisan proposal on the table from
Commissioners Toner and Thomas that would deal with the 527s in a
simple, straightforward way. With their proposal, the commission has
the perfect opportunity to prove they can uphold the election laws that
were passed by Congress more than 25 years ago, signed by the
President, and upheld by the Supreme Court. It may sound a little odd
to be excited at the prospect of a Federal agency properly upholding
existing law, but in the case of the FEC, it would be something of a
new phenomenon.
There is absolutely nothing in the general counsel's rationale for
delaying action here that justifies refusing to act now to fix the
FEC's absurd allocation regulations that are being used to spend 98
percent soft money to influence the presidential election. The general
counsel's recommendation provides no excuse for failing to act tomorrow
on the portion of the Toner/Thomas proposal that would fix the
allocation rules and correct the FEC's mistake in adopting them, a
mistake made clear by the Supreme Court decision McConnell v. FEC. The
only conclusion that can be reached if action to correct the allocation
rules is rejected by the FEC is that the commission wants to protect
and license the illegal use by 527 groups of soft money to finance
partisan voter mobilization efforts to influence the 2004 presidential
election.
The bipartisan proposal by Commissioner Michael Toner, a Republican,
and Commissioner Scott Thomas, a Democrat provides a clear, effective
and immediate solution to the soft money problems that have arisen with
these 527 groups. The FEC is supposed to meet tomorrow to consider this
proposal, and I strongly urge them to adopt the proposal and seize this
opportunity to enforce the law.
First, I note that their proposal would explicitly apply only to 527
political committees, and not to 501(c) nonprofit groups, which should
take care of the concerns of those in the nonprofit community that the
FEC would overreach, and affect their own important work. That is
simply no longer an issue, and the commission can act tomorrow, rather
than waiting around until a more convenient moment to enforce the law.
The Toner/Thomas proposal deals with what we believe to be the two
main problems with the 527 groups. First, their plan would fix the
commission's absurd allocation rules, which control the mix of soft and
hard money these groups can spend. Under the current rules, 527s can
simply claim that they're involved in both Federal and State elections,
even though they're obviously and admittedly clearly working for the
sole purpose of defeating or electing a presidential candidate. That
claim, and the absurd FEC rules that currently exist, has led one such
527 group to use 98 percent soft money for their partisan vote
mobilization activities to influence the presidential election and only
2 percent hard money. That is an obvious circumvention of the
longstanding Federal Election Campaign Act, FECA, as well as the new
ban on soft money in Federal elections, and a hole in the dike that
absolutely must be plugged.
The Toner/Thomas plan would deal with this by simply requiring
groups involved in partisan voter mobilization activities in Federal
elections to use a minimum of 50 percent hard money to pay for those
activities. that straightforward, easy to understand rule will have the
effect of substantially limiting the amount of soft money a 527 group
can use on these activities, and I believe it is an effective way to
deal with the problem at this time.
The second issue the two commissioners' plan would address is the
use of soft money by these 527 groups to run attack ads attacking and
promoting presidential candidates. These groups are claiming that they
are exempt from the normal Federal rules prohibiting the use of
soft money to fund such ads because they are not political committees
under FEC rules. In essence, these political organizations are claiming
that as long as their ads do not use words like ``vote for'' or ``vote
against,'' they can spend as much soft money as they please attacking
and promoting Federal candidates.
That argument is simply absurd, even though the FEC's failure to
properly enforce the law has allowed it to gain currency over the
years. In order to qualify for their 527 tax status, these
organizations have to meet the IRS test of being groups that are
``organized and operated primarily'' to influence elections. And under
the Federal
[[Page S5364]]
Election Campaign Act, which has been around since 1974, groups that
have a primary purpose of influencing Federal elections and raise or
spend $1,000 to do so have to register as political committees and
comply with Federal campaign finance laws. 527 political groups have
sprung up in this election with the clear and sole purpose of
influencing the presidential election. Under existing laws and Supreme
Court rulings these groups can run whatever ads they want--but they
have to register as Federal political committees and they do have to
abide by the same Federal campaign finance rules as all other political
committees and candidates have to play by, and pay for those ads with
hard money.
The Toner/Thomas proposal clears up this issue by correctly deeming
any organization operating as a political group under section 527 of
the tax code to have a ``major purpose'' of influencing Federal
elections, unless the group falls within certain specified exemptions.
This common-sense approach simply corrects the FEC failure to properly
interpret the law in the past as it applies to 527 groups. It makes it
clear that 527 political groups that have a major purpose to influence
Federal elections and spend more than $1,000 to influence a Federal
election have to comply with Federal campaign finance rules, regardless
of whether their communications contain express advocacy.
Again, we have a golden opportunity here to fix an emerging problem
before it gets out of hand. The Commission should take this rare
opportunity to show they can do their job in a bipartisan way. They
should approve the Toner/Thomas proposal on Thursday.
Mr. FEINGOLD. Mr. President, like Senator McCain, I see this
rulemaking on 527s quite simply as a test of the FEC's willingness to
enforce the law. As we have noted many times, the Supreme Court in the
McConnell v. FEC decision concluded that the FEC improperly interpreted
federal election law and allowed the growth of the soft money loophole
that made necessary our 7-year reform effort.
We have been watching the agency closely since the Bipartisan
Campaign Reform Act was signed into law in March 2002, looking for
signs that it will not repeat its past mistakes. For the most part, we
have been sorely disappointed. The announcement yesterday that the FEC
general counsel's office wants the commission to delay action on the
rulemaking for 90 days is the latest example of this agency's failure
to carry out its responsibilities.
It is important to remember that the issues the FEC has been
considering recently arise not under the Bipartisan Campaign Reform Act
that we passed a few short years ago, but rather under the Federal
Election Campaign Act of 1974. The question of whether an organization
is a political committee subject to the Federal election laws is
sometimes a complicated question, but it is not a new one.
The McConnell decision made it clear that the FEC's previous
approach, which was to allow 527s to avoid registering as political
committees if they didn't use ``express advocacy,'' was wrong. The FEC
needs to enforce the law so that groups whose major purpose is to
influence Federal elections are subject to the Federal election laws.
I believe that when an organization tells the IRS that its primary
purpose is to influence candidate elections in order to qualify for 527
status, it should not in most cases be able to turn around and tell the
FEC that its major purpose is not to influence elections. To me, that
just doesn't make sense.
It is unfortunate that the FEC initially approached this issue in a
way that frightened legislative advocacy groups into thinking that they
might become political committees and have to completely change their
fundraising and operations. It is also unfortunate that the nonprofit
community in opposing the erroneous FEC proposals took the position
that nothing should be done about 527s that are very much involved in
election activities but are seeking to operate outside of the election
laws.
Senator McCain and I, working with Representatives Shays and Meehan,
our reform partners in the House, filed comments with the FEC arguing
that there are narrow and targeted things that the FEC should do to
protect the integrity of the election laws, without affecting
legitimate 501(c)s. A bipartisan proposal announced recently by
Commissioners Michael Toner and Scott Thomas takes this approach.
The Toner-Thomas proposal addresses only 527 organizations. It does
not change the regulations that apply to 501(c)s. In addition, the
proposal would change the allocation rules that apply to 527s that have
both a Federal and a nonfederal account. It simply cannot be a correct
interpretation of the law that an organization that has publicly
declared that it will carry out partisan voter mobilization activities
in battleground states this fall can use 98 percent soft money to pay
for those activities. The Toner-Thomas proposal would require that at
least half of the expenditures on these activities come from a hard
money account. That certainly makes sense given that the groups
themselves proclaim that their purpose is to influence the presidential
election.
But now, the FEC's general counsel has proposed that the FEC delay
its vote on the rulemaking for 90 days. This will only assure that the
FEC will do nothing about 527s until after the 2004 elections. That is
not an acceptable result. It is crucial that the FEC act now. It should
adopt the Toner-Thomas proposal, but at the very least, it should
modify the allocation rules applicable to 527s doing voter
mobilization. There is absolutely no reason to postpone action on that
issue.
I hope that some day it will not be a cause for celebration when the
agency charged with enforcing the election laws look like it might
actually do its job. Unfortunately, the FEC has not been an effective
agency, and this latest proposed delay only confirms that it may not be
up to the task that Congress has given it. Senator McCain and I have
introduced legislation to replace the FEC with a very different
regulatory agency. I was pleased to read this week that the chairman of
the Rules Committee agrees that the Senate should take a very hard look
at the FEC and consider legislation to fundamentally change it.
For now, however, we will be watching closely to see how the FEC
deals with the challenge of the 527s. I once again commend the Senator
from Arizona for his dedication to this cause.
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