[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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