[House Report 109-146]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-146

======================================================================
 
                        527 FAIRNESS ACT OF 2005

                                _______
                                

 June 22, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Ney, from the Committee on House Administration, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1316]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on House Administration, to whom was referred 
the bill (H.R. 1316) to amend the Federal Election Campaign Act 
of 1971 to repeal the limit on the aggregate amount of campaign 
contributions that may be made by individuals during an 
election cycle, to repeal the limit on the amount of 
expenditures political parties may make on behalf of their 
candidates in general elections for Federal office, to allow 
State and local parties to make certain expenditures using 
nonfederal funds, to restore certain rights to exempt 
organizations under the Internal Revenue Code of 1986, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``527 Fairness Act of 2005''.

SEC. 2. REPEAL OF AGGREGATE LIMIT ON CONTRIBUTIONS BY INDIVIDUALS.

  (a) Repeal of Limit.--Section 315(a) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 441a(a)) is amended by striking paragraph (3).
  (b) Conforming Amendments.--
          (1) Indexing.--Section 315(c) of such Act (2 U.S.C. 441a(c)) 
        is amended by striking ``(a)(3),'' each place it appears in 
        paragraphs (1)(B)(i), (1)(C), and (2)(B)(ii).
          (2) Increase in limits for senate candidates facing wealthy 
        opponents.--Section 315(i)(1)(C) of such Act (2 U.S.C. 
        441a(i)(1)(C)) is amended--
                  (A) by amending clause (i) to read as follows:
                          ``(i) 2 times the threshold amount, but not 
                        over 4 times that amount, the increased limit 
                        shall be 3 times the applicable limit;'';
                  (B) by amending clause (ii) to read as follows:
                          ``(ii) 4 times the threshold amount, but not 
                        over 10 times that amount, the increased limit 
                        shall be 6 times the applicable limit; and''; 
                        and
                  (C) in clause (iii)--
                          (i) by adding ``and'' at the end of subclause 
                        (I),
                          (ii) by striking subclause (II), and
                          (iii) by redesignating subclause (III) as 
                        subclause (II).
          (3) Increase in limits for house candidates facing wealthy 
        opponents.--Section 315A(a)(1) of such Act (2 U.S.C. 441a--
        1(a)(1)) is amended--
                  (A) by adding ``and'' at the end of subparagraph (A);
                  (B) by striking subparagraph (B); and
                  (C) by redesignating subparagraph (C) as subparagraph 
                (B).

SEC. 3. REPEAL OF LIMIT ON AMOUNT OF PARTY EXPENDITURES ON BEHALF OF 
                    CANDIDATES IN GENERAL ELECTIONS.

  (a) Repeal of Limit.--Section 315(d) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 441a(d)) is amended--
          (1) in paragraph (1)--
                  (A) by striking ``(1) Notwithstanding'' and inserting 
                ``Notwithstanding'',
                  (B) by striking ``expenditures or limitations on'' 
                and inserting ``amounts of expenditures or'', and
                  (C) by striking ``Federal office, subject to the 
                limitations contained in paragraphs (2), (3), and (4) 
                of this subsection'' and inserting ``Federal office in 
                any amount''; and
          (2) by striking paragraphs (2), (3), and (4).
  (b) Conforming Amendments.--
          (1) Indexing.--Section 315(c) of such Act (2 U.S.C. 441a(c)) 
        is amended--
                  (A) in paragraph (1)(B)(i), by striking ``(d),''; and
                  (B) in paragraph (2)(B)(i), by striking ``subsections 
                (b) and (d)'' and inserting ``subsection (b)''.
          (2) Increase in limits for senate candidates facing wealthy 
        opponents.--Section 315(i) of such Act (2 U.S.C. 441a(i)(1)) is 
        amended--
                  (A) in paragraph (1)(C), as amended by section 
                2(b)(2)(C), by amending clause (iii) to read as 
                follows:
                          ``(iii) 10 times the threshold amount, the 
                        increased limit shall be 6 times the applicable 
                        limit.'';
                  (B) in paragraph (2)(A) in the matter preceding 
                clause (i), by striking ``, and a party committee shall 
                not make any expenditure,'';
                  (C) in paragraph (2)(A)(ii), by striking ``and party 
                expenditures previously made''; and
                  (D) in paragraph (2)(B), by striking ``and a party 
                shall not make any expenditure''.
          (3) Increase in limits for house candidates facing wealthy 
        opponents.--Section 315A(a) of such Act (2 U.S.C. 441a--1(a)) 
        is amended--
                  (A) in paragraph (1), as amended by section 2(b)(3), 
                by striking ``exceeds $350,000--'' and all that follows 
                and inserting the following: ``exceeds $350,000, the 
                limit under subsection (a)(1)(A) with respect to the 
                candidate shall be tripled.'';
                  (B) in paragraph (3)(A) in the matter preceding 
                clause (i), by striking ``, and a party committee shall 
                not make any expenditure,'';
                  (C) in paragraph (3)(A)(ii), by striking ``and party 
                expenditures previously made''; and
                  (D) in paragraph (3)(B), by striking ``and a party 
                shall not make any expenditure''.

SEC. 4. INCREASE IN CONTRIBUTION LIMITS FOR POLITICAL COMMITTEES.

  (a) Contributions to Political Committees.--Section 315(a)(1)(C) of 
the Federal Election Campaign Act of 1971 (2 U.S.C. 441a(a)(1)(C)) is 
amended by striking ``$5,000'' and inserting ``$7,500''.
  (b) Contributions Made by Multicandidate Committees.--Section 
315(a)(2) of such Act (2 U.S.C. 441a(a)(2)) is amended--
          (1) in subparagraph (A), by striking ``$5,000'' and inserting 
        ``$7,500'';
          (2) in subparagraph (B), by striking ``$15,000'' and 
        inserting ``$25,000''; and
          (3) in subparagraph (C), by striking ``$5,000'' and inserting 
        ``$7,500''.

SEC. 5. INDEXING OF ALL CONTRIBUTION LIMITS.

  (a) In General.--Section 315(c)(1)(B) of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 441a(c)(1)(B)) is amended to read as 
follows:
  ``(B) Except as provided in subparagraph (C)--
          ``(i) in any calendar year after 2002--
                  ``(I) a limitation established by subsection 
                (a)(1)(A), (a)(1)(B), (b), or (h) shall be increased by 
                the percent difference under subparagraph (A),
                  ``(II) each amount so increased shall remain in 
                effect for the calendar year, and
                  ``(III) if any amount after the adjustment made under 
                subclause (I) is not a multiple of $100, such amount 
                shall be rounded to the nearest multiple of $100; and
          ``(ii) in any calendar year after 2006--
                  ``(I) a limitation established by subsection 
                (a)(1)(C), (a)(1)(D), or (a)(2) shall be increased by 
                the percent difference under subparagraph (A),
                  ``(II) each amount so increased shall remain in 
                effect for the calendar year, and
                  ``(III) if any amount after the adjustment made under 
                subclause (I) is not a multiple of $100, such amount 
                shall be rounded to the nearest multiple of $100.''.
  (b) Period of Increase.--Section 315(c)(1)(C) of such Act (2 U.S.C. 
441a(c)(1)(C)), as amended by section 2(b)(1), is amended by striking 
``subsections (a)(1)(A), (a)(1)(B), and (h)'' and inserting 
``subsections (a) and (h)''.
  (c) Determination of Base Year.--Section 315(c)(2)(B) of such Act (2 
U.S.C. 441a(c)(2)(B)) is amended--
          (1) by striking ``and'' at the end of clause (i);
          (2) by striking the period at the end of clause (ii) and 
        inserting ``; and''; and
          (3) by adding at the end the following new clause:
                  ``(iii) for purposes of subsections (a)(1)(C), 
                (a)(1)(D), and (a)(2), calendar year 2005.''.

SEC. 6. PERMITTING TRANSFERS BETWEEN LEADERSHIP COMMITTEES AND NATIONAL 
                    PARTY COMMITTEES.

  Section 315(a)(4) of the Federal Election Campaign Act of 1971 (2 
U.S.C. 441a(a)(4)) is amended--
          (1) by striking ``(4)'' and inserting ``(4)(A)''; and
          (2) by adding at the end the following new subparagraph:
  ``(B) The limitations on contributions contained in paragraphs (1) 
and (2) do not apply to transfers between a leadership committee of an 
individual holding Federal office and political committees established 
and maintained by a national political party. For purposes of the 
previous sentence, the term `leadership committee' means, with respect 
to an individual holding Federal office, an unauthorized political 
committee which is associated with such individual but which is not 
affiliated with any authorized committee of such individual.''.

SEC. 7. INCREASE IN THRESHOLD OF CONTRIBUTIONS AND EXPENDITURES 
                    REQUIRED FOR DETERMINING TREATMENT AS POLITICAL 
                    COMMITTEE.

  (a) In General.--Section 301(4)(A) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 431(4)(A)) is amended by striking ``$1,000'' each 
place it appears and inserting ``$10,000''.
  (b) Local Political Party Committees.--
          (1) Contributions received.--Section 301(4)(C) of such Act (2 
        U.S.C. 431(4)(C)) is amended by striking ``$5,000'' each place 
        it appears and inserting ``$10,000''.
          (2) Contributions or expenditures made.--Section 301(4)(C) of 
        such Act (2 U.S.C. 431(4)(C)) is amended by striking ``$1,000'' 
        each place it appears and inserting ``$10,000''.

SEC. 8. PROHIBITING CONTRIBUTIONS AND DONATIONS TO SECTION 527 
                    ORGANIZATIONS BY FOREIGN NATIONALS.

  (a) In General.--Section 319(a)(1) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 441e(a)(1)) is amended--
          (1) by striking ``or'' at the end of subparagraph (B);
          (2) by redesignating subparagraph (C) as subparagraph (D); 
        and
          (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                  ``(C) a contribution or donation to an organization 
                described in section 527 of the Internal Revenue Code 
                of 1986; or''.
  (b) Conforming Amendment Regarding Solicitation of Funds.--Section 
319(a)(2) of such Act (2 U.S.C. 441e(a)(2)) is amended by striking 
``(A) or (B)'' and inserting ``(A), (B), or (C)''.

SEC. 9. REQUIRING SECTION 527 ORGANIZATIONS TO SUBMIT REPORTS UNDER 
                    FEDERAL ELECTION CAMPAIGN ACT OF 1971.

  Section 304(a) of the Federal Election Campaign Act of 1971 (2 U.S.C. 
434(a)) is amended by adding at the end the following new paragraph:
  ``(13)(A) Except as provided in subparagraph (B), each organization 
described in section 527 of the Internal Revenue Code of 1986 shall 
submit a report under this section in the same manner, under the same 
terms and conditions, and at the same times applicable to a political 
committee which is not an authorized committee of a candidate or a 
national committee of a political party.
  ``(B) Subparagraph (A) does not apply to an organization described in 
section 527(j)(5)(B) of the Internal Revenue Code of 1986 (relating to 
a State or local committee of a political party or political committee 
of a State or local candidate).''.

SEC. 10. PERMITTING EXPENDITURES FOR ELECTIONEERING COMMUNICATIONS BY 
                    CERTAIN ORGANIZATIONS.

  (a) Permitting Organizations to Make Expenditures for Certain 
Targeted Electioneering Communications.--Section 316(c) of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 441b(c)) is amended by striking 
paragraph (6).
  (b) Expanding Types of Organizations Eligible to Make Expenditures.--
          (1) In general.--Section 316(c) of such Act (2 U.S.C. 
        441b(c)) is amended by striking ``section 501(c)(4) 
        organization'' each place it appears in paragraphs (2), (3)(B), 
        and (4)(A) (in the matter preceding clause (i)) and inserting 
        ``section 501(c)(4), (5), or (6) organization''.
          (2) Definition.--Section 316(c)(4)(A)(i) of such Act (2 
        U.S.C. 441b(c)(4)(A)(i)) is amended by striking ``section 
        501(c)(4) of the Internal Revenue Code of 1986'' and inserting 
        ``paragraph (4), (5), or (6) of section 501(c) of the Internal 
        Revenue Code of 1986''.
  (c) Clarification of Effect on Tax Treatment of Expenditures.--
Section 316(c)(5) of such Act (2 U.S.C. 441b(c)(5)) is amended by 
striking the period at the end and inserting the following: ``, or to 
affect the treatment under such Code of any expenditures described in 
section 527(e) of such Code which are made by a section 501(c)(4), (5), 
or (6) organization.''.

SEC. 11. EXPANDING ABILITY OF CORPORATIONS AND LABOR ORGANIZATIONS TO 
                    COMMUNICATE WITH MEMBERS.

  (a) Types of Communications Permitted.--Section 316(b)(4)(B) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 441b(b)(4)(B)) is 
amended by striking ``only by mail addressed'' and inserting ``only by 
communications addressed or otherwise delivered''.
  (b) Solicitations by Trade Associations.--Section 316(b)(4)(D) of 
such Act (2 U.S.C. 441b(b)(4)(D)) is amended by striking ``to the 
extent that'' and all that follows and inserting a period.

SEC. 12. PERMITTING STATE AND LOCAL POLITICAL PARTIES TO USE NONFEDERAL 
                    FUNDS FOR VOTER REGISTRATION AND SAMPLE BALLOTS.

  (a) In General.--Section 301(20) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 431(20)) is amended--
          (1) in subparagraph (A), by striking clause (i) and 
        redesignating clauses (ii) through (iv) as clauses (i) through 
        (iii); and
          (2) in subparagraph (B)--
                  (A) in clause (i), by striking ``subparagraph (A)(i) 
                or (ii)'' and inserting ``subparagraph (A)(i)'';
                  (B) by striking ``and'' at the end of clause (iii);
                  (C) by striking the period at the end of clause (iv) 
                and inserting a semicolon; and
                  (D) by adding at the end the following new clauses:
                          ``(v) voter registration activities; and
                          ``(vi) the costs incurred with the 
                        preparation of a sample ballot for an election 
                        in which a candidate for Federal office and a 
                        candidate for State or local office appears on 
                        the ballot.''.
  (b) Conforming Amendments.--(1) Section 304(f)(3)(B)(iv) of such Act 
(2 U.S.C. 434(f)(3)(B)(iv)) is amended by striking ``section 
301(20)(A)(iii)'' and inserting ``section 301(20)(A)(ii)''.
  (2) Section 323 of such Act (2 U.S.C. 441i) is amended--
          (A) in subsection (b)(2)(A), by striking ``clause (i) or 
        (ii)'' and inserting ``clause (i)'';
          (B) in subsection (e)(4), by striking ``clauses (i) and 
        (ii)'' each place it appears in subparagraphs (A) and (B) and 
        inserting ``clause (i)''; and
          (C) in subsection (f)(1), by striking ``section 
        301(20)(A)(iii)'' and inserting ``section 301(20)(A)(ii)''.

SEC. 13. CLARIFICATION OF AUTHORIZATION OF FEDERAL CANDIDATES AND 
                    OFFICEHOLDERS TO ATTEND FUNDRAISING EVENTS FOR 
                    STATE OR LOCAL POLITICAL PARTIES.

  Section 323(e)(3) of the Federal Election Campaign Act of 1971 (2 
U.S.C. 441i(e)(3)) is amended by striking ``speak,'' and inserting 
``speak without restriction or regulation,''.

SEC. 14. MODIFICATION OF DEFINITION OF PUBLIC COMMUNICATION.

  (a) In General.--Section 301(22) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 431(22)) is amended by adding at the end the 
following new sentence: ``Such term shall not include communications 
over the Internet.''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect on the date of the enactment of this Act.

SEC. 15. TREATMENT OF CANDIDATE COMMUNICATIONS CONTAINING ENDORSEMENT 
                    BY FEDERAL CANDIDATE OR OFFICEHOLDER.

  (a) In General.--Section 315(a) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 441a(a)) is amended by adding at the end the 
following new paragraph:
  ``(9)(A) For purposes of paragraph (7)(C), a disbursement for an 
electioneering communication which refers to a candidate for Federal 
office shall not be treated as a disbursement which is coordinated with 
such candidate solely on the ground that the communication contains a 
State or local endorsement or (in the case of a communication 
containing a State or local endorsement) that the candidate reviewed, 
approved, or otherwise participated in the preparation and 
dissemination of the communication.
  ``(B) In subparagraph (A), the term `State or local endorsement' 
means, with respect to a candidate for Federal office--
          ``(i) an endorsement by such candidate of a candidate for 
        State or local office or of another candidate for Federal 
        office; or
          ``(ii) a statement of the position of such candidate on a 
        State or local ballot initiative or referendum.''.
  (b) Conforming Amendment.--Section 315(a)(7)(C)(ii) of such Act (2 
U.S.C. 441a(a)(7)(C)(ii)) is amended by striking ``such disbursement'' 
and inserting ``subject to paragraph (9), such disbursement''.
  (c) Effective Date.--The amendments made by this section shall apply 
with respect to elections occurring on or after the date of the 
enactment of this Act.

SEC. 16. SEVERABILITY.

  If any provision of this Act or any amendment made by this Act, or 
the application of a provision or amendment to any person or 
circumstance, is held to be unconstitutional, the remainder of this Act 
and the amendments made by this Act, and the application of the 
provisions and amendments to any person or circumstance, shall not be 
affected by the holding.

SEC. 17. EFFECTIVE DATE.

  Except as otherwise provided, the amendments made by this Act shall 
take effect January 1, 2006.

                       Purpose of the Legislation

    The Bipartisan Campaign Reform Act of 2002 (``BCRA'') threw 
our federal campaign finance system out of balance when it 
passed three years ago. The law's proponents claimed that BCRA 
would ban soft money, but it didn't. Rather, it merely diverted 
the flow of soft money. In the process, power and influence 
were shifted away from our political parties and towards less 
accountable, ideologically driven Section 527 organizations and 
other outside groups. Furthermore, BCRA's tangled web of 
onerous restrictions and harsh criminal penalties significantly 
impeded the ability of citizens and associations to exercise 
their First Amendment rights. Rather than add to the 
labyrinthine set of rules and regulations already on the books, 
the Committee opts to take a different, more productive 
approach.
    The purpose of H.R. 1316, the 527 Fairness Act of 2005, as 
amended, is to restore some of the balance that was lost when 
BCRA was enacted. H.R. 1316, co-authored by Representatives 
Mike Pence (R-IN) and Albert Wynn (D-MD), accomplishes this 
objective not by tearing down 527 organizations but by lifting 
up party committees, political action committees (``PACs''), 
and individuals so that they can compete on a more level 
playing field with 527 organizations. Currently, 527 
organizations are able to fund their political activities with 
unlimited ``soft money'' contributions from labor unions, 
corporations, and wealthy individuals. And there are already 
reports that 527 organizations may ``have a bigger impact on 
the [2006] midterm elections than they had on last year's 
presidential race because . . . their spending would make up a 
greater percentage of total political spending.'' \1\ Thus, it 
is essential that the other entities involved in our campaign 
system--namely, parties, candidates, committees, and citizens--
be able to raise the hard money resources they need to stay 
afloat in a political environment flooded by 527 soft money. 
And it is equally important that the American public receive 
full and timely disclosure regarding the individuals and groups 
that are financing the 527 organizations.
---------------------------------------------------------------------------
    \1\ Alexander Bolton, ACT to Spend $30 Million, The Hill, Jun. 14, 
2005, at 1.
---------------------------------------------------------------------------
    When the Supreme Court upheld the constitutionality of most 
of BCRA's provisions in McConnell v. FEC, it found that 
Congress ``enjoys particular expertise'' with respect to 
campaign finance regulation that warrants ``proper deference.'' 
\2\ So, although the constitutional questions regarding BCRA 
have been largely resolved, at least for the moment, Congress 
has an ongoing responsibility to use its expertise to evaluate 
the efficacy of the nation's election laws and to make 
modifications as necessary to improve the functioning of our 
campaign finance system. In the Committee's estimation, H.R. 
1316 is necessary to correct the deficiencies in BCRA and to 
ameliorate the negative consequences that arose in the wake of 
its passage.
---------------------------------------------------------------------------
    \2\ 540 U.S. 93, 95 (2003).
---------------------------------------------------------------------------
    Even before BCRA was passed, several Members predicted 
that, contrary to the assertions of its supporters, BCRA would 
do nothing to stem the tide of soft money. For instance, 
Chairman Ney flatly stated on the House Floor that BCRA ``does 
not ban soft money under any definition or under any stretch of 
the imagination.'' \3\ Similarly, Senator Mitch McConnell said 
at the time that ``under this bill, I promise you, if [BCRA] 
becomes law, there won't be one penny less spent on politics--
not a penny less. In fact, a good deal more will be spent on 
politics.'' \4\ So, an explosion of soft money spending by 527 
organizations during the 2004 election was by no means 
unanticipated.
---------------------------------------------------------------------------
    \3\ 148 Cong. Rec. H339 (daily ed. Feb. 13, 2002).
    \4\ 147 Cong. Rec. S3105 (daily ed. Mar. 29, 2001).
---------------------------------------------------------------------------
    True to the predictions of these Members, as soon as BCRA 
went into effect, plans were being hatched to steer soft 
money--which party committees had previously been able to 
accept but could no longer--towards 527 groups. Though 527s are 
legally prohibited from expressly advocating the election or 
defeat of a federal candidate, several sprung up that were 
unabashed in stating that their mission was to defeat President 
George W. Bush in the 2004 presidential election.\5\ The most 
generous contributor to anti-Bush 527s was billionaire George 
Soros, who donated over $27 million to these groups.\6\ In the 
year leading up to the 2004 presidential race, Mr. Soros stated 
that ``defeating President Bush'' was ``the central focus of my 
life'' and ``a matter of life and death,'' and that he was 
``willing to put my money where my mouth is.'' \7\ As 
documented by the Washington Post,
---------------------------------------------------------------------------
    \5\ To be sure, there were 527 groups in the 2004 election cycle 
that were Republican-leaning. However, the overwhelming majority of 
soft money raised and spent during the most recent election was by 
anti-Bush 527s. Studies indicate that Democrat-leaning 527s outraised 
and outspent Republican-leaning 527s by about a margin of four-to-one. 
See Steve Weissman & Ruth Hassan, BCRA and the 527 Groups, Campaign 
Fin. Inst. Report, Table A-2, available at http:// www.cfinst.org/
studies/ElectionAfterReform/pdf/EAR_527Chapter.pdf.
    \6\ See Large 527 Donors for Election Cycle 2004, Political Money 
Line, available at http:// www.fecinfo.com/cgi-win/
irs_ef_top.exe?DoFn=DONOR&sYR=2004.
    \7\ Laura Blumenfeld, Soros's Deep Pockets vs. Bush; Financier 
Contributes $5 Million More in Effort to Oust President, Wash. Post, 
Nov. 11, 2003, at A03.

          [Mr. Soros's] campaign began last summer with the 
        help of Morton H. Halperin, a liberal think tank 
        veteran. Soros invited Democratic strategists to his 
        house in Southampton, Long Island, including Clinton 
        chief of staff John D. Podesta, Jeremy Rosner, Robert 
        Boorstin and Carl Pope.
          They discussed the coming election. Standing on the 
        back deck, the evening sun angling into their eyes, 
        Soros took aside Steve Rosenthal, CEO of the liberal 
        activist group America Coming Together (ACT), and Ellen 
        Malcolm, its president. They were proposing to mobilize 
        voters in 17 battleground states. Soros told them he 
        would give ACT $10 million . . .
          Before coffee the next morning, his friend Peter 
        Lewis, chairman of the Progressive Corp., had pledged 
        $10 million to ACT. Rob Glaser, founder and CEO of 
        RealNetworks, promised $2 million. Rob McKay, president 
        of the McKay Family Foundation, gave $1 million and 
        benefactors Lewis and Dorothy Cullman committed 
        $500,000.\8\
---------------------------------------------------------------------------
    \8\ Id. The entire article will be included in the appendix to this 
report.

    According to the Political Money Line, 527 groups expended 
nearly $600 million during the 2004 election cycle.\9\ A number 
of these organizations functioned as ``shadow'' political party 
committees that, with the apparent stamp of approval of the 
relevant federal officeholders and party officials, solicited 
and spent soft money in support of the party's candidates and 
agenda and took over, to a large extent, traditional party 
functions, such as voter registration and get-out-the-vote 
activities.\10\
---------------------------------------------------------------------------
    \9\ http://www.fecinfo.com/cgi-win/irs_ef_527.exe?DoFn=&sYR=2004.
    \10\ ACT President Ellen Malcolm stated: ``We have to find ways to 
come together to do lots of the pieces of the presidential campaign, 
because the party will not have the soft money to use. We on the 
Democratic side are looking for effective ways to do the work of 
delivering the message and getting out the vote that used to be done by 
the party.'' Julie Kosterlitz, On the Ropes? 35 Nat'l J., Sept. 6, 
2003, at 36.
---------------------------------------------------------------------------
    Proponents of BCRA now argue that the new law's 
effectiveness should be judged not by whether soft money still 
thrives but by whether it has succeeded in severing the link 
between federal elected officials and soft money. And on this 
ground, BCRA's supporters declare that the new law is a rousing 
success. While it may be true that federal officeholders and 
candidates are no longer directly soliciting soft money, it 
would be inaccurate to state that the link between soft money 
organizations and federal officeholders, candidates, and top 
party officials has been completely severed.
    During the 2004 election cycle, there were numerous 
connections between top party officials and major 527 groups, 
and there was also steady movement between political campaigns 
and 527s. For instance, Harold Ickes, former top advisor to 
President Bill Clinton, functioned as both a member of the 
Executive Committee of the Democratic National Committee (DNC) 
while also serving as President of the Media Fund--a 527 
dedicated to running anti-Bush and pro-Democrat ads--and Chief 
of Staff to ACT, which focused on getting out the Democratic 
vote.\11\ The dual and often interrelated roles played by Mr. 
Ickes were on full display during the 2004 Democratic National 
Convention in Boston. According to an article by the New York 
Times, Mr. Ickes ``court[ed] some the Democrats' wealthiest 
donors here at the Four Seasons'' during the day, soliciting 
them for contributions to the Media Fund, and ``[t]hen, in the 
evenings, this onetime White House deputy chief of staff throws 
on his credentials as a Democratic Party superdelegate and 
joins party functionaries gathered for the Democratic 
convention at the FleetCenter as one of their own.'' \12\ The 
article continued:

    \11\ Jim Drinkard, ``Outside'' Political Groups Full of Party 
Insiders, USA TODAY, Jun. 28, 2004, at 7A.
    \12\ Jim Rutenberg & Glen Justice, A Delegate, a Fund-Raiser, and a 
Very Fine Line, N.Y. Times, Jul. 29, 2004, at A1.

    The scene at the Four Seasons this week has shown just how 
close to the line of independence groups like The Media Fund--
which has been running advertisements against President Bush 
since March--can come.
    Just down the hallway from Mr. Ickes's second-floor suite 
in the Wendell Phillips Room is the registration office in the 
Winthrop Room, where fund-raisers pick up their special-access 
passes. As Mr. Ickes mingled with passers-by outside of his 
suite Wednesday afternoon, a parade of campaign and party 
officials walked by, including Bob Shrum, Mr. Kerry's chief 
strategist. Mr. Shrum and Mr. Ickes have worked on campaigns 
together like the David N. Dinkins New York mayoral campaigns 
of 1989 and 1993.
    Mr. [Erik] Smith [Executive Director of the Media Fund] was 
also right near longtime comrades-in-arms. While Mr. Smith sat 
at a table in the Four Seasons lounge speaking with a reporter 
on Tuesday, Steve Elmendorf, Mr. Kerry's deputy campaign 
manager, who is staying at a nearby hotel, passed by the 
window. Mr. Elmendorf was a senior adviser for the presidential 
campaign of Representative Richard A. Gephardt of Missouri last 
fall when Mr. Smith was its press secretary.
    The proximity is hardly by chance. The hotel is not just 
the base of operation for Mr. Smith, Mr. Ickes and yet another 
group for which Mr. Ickes is raising money, America Coming 
Together, but has also become a salon for top fund-raisers in 
the Kerry campaign and the Democratic Party. . . .
    But the intermingling of the avowed independent groups and 
Democratic officials is not restricted to the Four Seasons 
here. Environment 2004, an organization that runs a 527 
committee held a reception to thank donors on Monday at the 
Beacon Hill home of Cathy Douglas Stone, a Boston environmental 
activist. Among those who spoke were the columnist Arianna 
Huffington, the singer Carole King and Senator Maria Cantwell 
of Washington.
    On Monday Ms. Malcolm was on hand at an event honoring 
Representative Nancy Pelosi of California, the House minority 
leader, that drew dozens of lawmakers and major donors together 
to drink lemonade and iced tea in a garden atrium of the 
Isabella Stewart Gardner museum. Later that night, Ms. Malcolm, 
like Mr. Ickes, was on the convention floor.
    And Mr. Ickes is not the only official of a 527 group with 
delegate status. Simon Rosenberg, head of the New Democrat 
Network, a group running Spanish-language advertisements 
against Mr. Bush since March, said he sits on the convention's 
platform committee.\13\

    \13\ Id. The entire article will be included in the appendix to 
this report.

    Other examples of top party officials who also played 
formal roles in the operation of 527 groups included New Mexico 
Governor Bill Richardson, who simultaneously served as 
Convention Chair of the DNC Convention and as the Vice Chair of 
Voice for Working Families, a Democrat-leaning 527 group that 
spent over $7 million in 2004. And Jim Jordan went from being 
John Kerry's campaign manager to serving as spokesperson for 
the Media Fund and representing that group as well as ACT and 
America Votes.
    As for the flow of personnel from 527 groups to political 
campaigns, Zach Exley transitioned from Director of Special 
Projects for MoveOn.org to become the Director of Online 
Communications and Organization for John Kerry's presidential 
campaign. Similarly, Bill Knapp first served as an ad 
consultant to the Media Fund before being hired by the Kerry 
campaign. Whether any of the arrangements listed above 
constituted illegal coordination in violation of federal 
campaign finance law, the Committee offers no opinion. However, 
these interactions do demonstrate that BCRA's wall separating 
federal officeholders, candidates, and party officials from the 
influence of soft money is unquestionably porous.
    In the aftermath of the 2004 election, the interrelations 
between the 527s and Democrat lawmakers and party officials has 
only grown. House Democratic Leader Nancy Pelosi acknowledges 
that she ``or her staff have calls and meetings `on a weekly 
basis' with representatives of MoveOn'' \14\--one of the most 
active Democrat-leaning 527s during the most recent election 
cycle, and a group to which George Soros gave $2.5 million.\15\ 
The DNC has praised MoveOn for its efforts, stating that 
``[o]bviously they are relaying the Democratic Party message.'' 
\16\ And in an e-mail sent out earlier this year to MoveOn 
supporters, Eli Pariser, the executive director of the 
organization, brazenly announced that the Democratic Party is 
now ``our party: We bought it, we own it and we're going to 
take it back.'' \17\ Thus, the prediction by BCRA's supporters 
that soft money would be purged from the federal electoral 
process and that the overall impact of money on politics would 
be lessened has been proven false.
---------------------------------------------------------------------------
    \14\ Chris Cillizza, MoveOn Goes Mainstream, Roll Call, Apr. 13, 
2005.
    \15\ See Political Money Line, 527 Donor: George Soros, available 
at http://www.fecinfo.com/cgi-win/
irs_ef_inter.exe?DoFn=&sText=44919&sYR=2004.
    \16\ Cillizza, supra note 11.
    \17\ Id.
---------------------------------------------------------------------------
    Those who allege that the continuing presence of soft money 
in the federal electoral process is the fault of the FEC are 
being disingenuous. For it was not only the opponents of BCRA 
who pointed out that the law would not eliminate soft money but 
merely redirect it to less accountable channels; the reformers 
themselves acknowledged that soft money would still play a role 
through its use by independent groups. For instance, Senator 
Jim Jeffords, the author of a prominent section of BCRA, stated 
flatly during the Senate debate that BCRA ``will not prohibit 
groups like the National Right to Life Committee or the Sierra 
Club from disseminating electioneering communications; It will 
not prohibit such groups from accepting corporate or labor 
funds; It will not require such groups to create a PAC or 
another separate entity.'' \18\ Likewise, Senator Olympia Snowe 
averred that ``[w]e are not saying they can't run ads. They can 
run ads all year long. They can do whatever they want in that 
sense. But what we are saying is, when they come into that 
narrow window, we have the right to know who are their major 
contributors who are financing those ads close to an 
election.'' \19\
---------------------------------------------------------------------------
    \18\ 147 Cong. Rec. S2812-13 (Mar. 23, 2001).
    \19\ Id. at S3012 (Mar. 28, 2001).
---------------------------------------------------------------------------
    BCRA has also had a harmful effect on the political parties 
in this country. The reformers respond to this charge by 
claiming that the fundraising for the national parties during 
the 2004 election cycle is going better than ever. However, 
this provides a very incomplete picture of the overall health 
of the nation's party structure. As is typical of the reform 
crowd, they focus exclusively on what is happening at the 
federal level and basically view state and local parties as 
nothing more than vehicles used by the national parties to 
circumvent the federal campaign finance laws. A closer look at 
the operations of state and local parties, though, reveals a 
troubling situation.
    A recent report by the Center for Public Integrity shows 
that ``[c]ampaign finance reform took a bite out of the bottom 
line for state parties in 2004.'' The report concludes that 
``[t]he downturn is largely attributable to the Bipartisan 
Campaign Reform Act.'' The report notes that ``state parties 
drastically reduced their investment in political advertising 
after the McCain-Feingold legislation eliminated transfers of 
soft money from the national committees to their state 
affiliates.'' The result was a drop of 74 percent in 
advertising. However, the report found that despite the drastic 
decline in state party advertising, BCRA did not result in less 
money being spent on political ads, primarily because ``media 
buys of 527 and 501(c)(4) non-profit organizations . . . made 
up the difference.'' \20\ So again, it is clearly demonstrated 
that BCRA did not reduce the amount of soft money in politics; 
it just steered soft money to entities that are unaccountable 
to the electorate.
---------------------------------------------------------------------------
    \20\ Agustin Armendariz & Aron Pilhofer, McCain-Feingold Changes 
State Party Spending, May, 26, 2005, available at http://
www.publicintegrity.com / partylines/report.aspx?aid=690&sid=300.
---------------------------------------------------------------------------
    Comments recently submitted to the Federal Election 
Commission by Mark Brewer, the President of the Association of 
State Democratic Chairs, clearly and alarmingly demonstrate the 
difficulties that state and local parties face in a post-BCRA 
world. Mr. Brewer notes: ``State and local party committees 
operate in a very complex regulatory environment. No other 
political committees are asked to manage such Byzantine 
rules.'' He goes on to say: ``An unfortunate consequence of 
BCRA is that many state and local party committees are avoiding 
participating in grassroots political activity because federal 
law poses compliance challenges that are beyond their ability 
to meet.'' He further states that BCRA's restrictions have left 
many party committees, ``particularly [those] at the local 
level and in states that [are] not Presidential targets,'' 
unable to raise ``sufficient federal funds to pay for voter 
registration, voter identification and get-out-the-vote 
programs . . . Instead of running the risk of violating federal 
law,many committees simply [do] not engage in federal election 
activity.'' Mr. Brewer rues the fact that burdensome regulations are 
``accelerat[ing] the flow of [GOTV] activities out of the party into 
less accountable political organizations.'' Mr. Brewer pungently 
concludes his comments with the following remarks:

        The Commission's regulations should reflect what state 
        and local committees actually do, rather than unfounded 
        fears of wholesale circumvention of the law. Facts 
        rather than wildly imagined corruptive schemes should 
        guide the Commission. Visit a few local party 
        committees and any fears will be allayed. Add to the 
        complexity of the regulation and there will be fewer to 
        visit.\21\
---------------------------------------------------------------------------
    \21\ Comments of Mark Brewer on Proposed Regulations Defining 
Federal Election Activity and on the Proposed Regulation Governing 
Allocation of Salaries by State and Local Party Committees, submitted 
to the Federal Election Commission, available at http://www.fec.gov/
pdf/nprm/fea_definition/comm_03.pdf. The entire comments will be 
included in the appendix to this report.

    As the above clearly demonstrates, state and local parties 
are starved of resources and being suffocated by excessive 
regulation, largely due to BCRA. This is not good for our 
democracy. The political parties play a crucial role as 
mediating institutions within our political system. The health 
of our democracy is inseparably linked to the health of our 
political parties. Consequently, changes need to be made to 
ensure the continuing viability of our party structure at all 
levels: federal, state, and local.
    It is useful to examine what other promises were made by 
BCRA's supporters and compare them against the actual results. 
BCRA's supporters asserted that the new law would result in 
fewer negative advertisements being broadcast during the course 
of campaigns and, thus, usher in a new era of more honest, less 
negative politics.\22\ But if anything, BCRA's passage has 
actually led to an increase in negative, scorched-earth 
politicking.\23\ The reason for this is two-fold:
---------------------------------------------------------------------------
    \22\ ``Q. [Business Week]: Will elections be cleaner this year 
because of McCain-Feingold reforms?
    ``A. [Senator McCain]: They're cleaner, and here's why: Sixty days 
prior to the election, you will not see the flood of [negative] 
advertising you saw before. And I approve of the 'stand by your ad' 
clause. It has dramatically reduced the number of attack ads.'' McCain: 
The FEC is a ``Total Disgrace,'' Bus. Wk. Online, Jun. 14, 2004, 
available at http://www.businessweek.com/magazine/content/04_24/
b3887079.htm.
    See also, 148 Cong. Rec. 2117 (daily ed. Mar. 20, 2002)(statement 
of Sen. Cantwell)(asserting that BCRA ``is about slowing political 
advertising and making sure the flow of negative ads by outside 
interest groups does not continue to permeate the airwaves); 147 Cong. 
Rec. 2692 (daily ed. Mar. 22, 2001) (statement of Sen. Wyden)(claiming 
that BCRA's ``stand-by-your-ad'' provisions ``will help slow the 
explosive growth of negative political commercials that are corroding 
the faith of individuals in the political process).
    \23\ ``[T]he 2004 election cycle . . . has evolved into one of the 
most relentlessly negative political campaigns in memory, as attacks on 
a candidate's character, patriotism and fitness for office, which once 
seemed out of bounds, have become routine. More ads than ever focused 
on discrediting an opponent rather than promoting a candidate, 
independent analysts said. . . .
    ``Part of the negative tenor of the 2004 campaign can be traced to 
the proliferation of independent political groups known as 527s, named 
for the tax-code section that governs them.'' Janet Hook, Campaigns 
Accentuate the Negative, L.A. Times, Oct. 17, 2004, at A1.
---------------------------------------------------------------------------
          1. Money is being diverted away from the political 
        parties--which, as broad-based organizations, must 
        moderate their messages to appeal to the largest 
        audience possible--and is instead being given to 
        single-issue ideological groups whose stances are often 
        dogmatic, whose communication strategies are often 
        hard-edged, and who aren't accountable to the voters; 
        and
          2. It is now an almost universal political tactic for 
        candidates and groups to file complaints against their 
        opponents alleging violations of a vague, complex, and 
        difficult-to-understand campaign finance law. Thus, 
        these laws encourage political actors to not only 
        attack the policy positions of their opponents but to 
        tar them as lawbreakers as well.
    In this way, BCRA has contributed to a more negative, and 
often poisonous, political environment.\24\
---------------------------------------------------------------------------
    \24\ ``[I]t doesn't take a genius to realize that campaign finance 
reform makes it easier and more convenient for both sides to run nasty 
advertising while avoiding any accountability for toxic messages. . . . 
Far from banishing money from politics, McCain-Feingold has merely 
moved it out of the major parties and into the political shadows, where 
it is less accountable. John Fund, Why We're Refighting Vietnam: Blame 
McCain-Feingold, Wall St. J.
---------------------------------------------------------------------------
    The reformers also argued that, upon BCRA's passage, public 
cynicism about the political process would abate because 
elections would now be free from the taint of soft money and 
the appearance of improper influence.\25\ Actually, it is more 
likely that the American people become more cynical when they 
are told that a law will rid the political system of soft 
money, see that it does not, and then have to listen to the 
advocates of the law crow about what a success it is. And one 
becomes even more incredulous upon learning that the same 
groups that continually rail against the supposedly corrupting 
effects of soft money themselves have no compunctions about 
taking approximately $140 million in soft money as part of a 
manufactured effort by a handful of liberal foundations to 
create the false impression that a mass grassroots movement was 
demanding campaign finance reform.\26\
---------------------------------------------------------------------------
    \25\ See, e.g., 148 Cong. Rec. 1996 (daily ed. Mar. 18, 
2002)(statement of Sen. Dodd)(``[A]dopting this moderate legislation [ 
] restores the proper balance of money to politics and restores the 
American people's confidence in our current financing system.'').
    \26\ See Political Money Line, Campaign Finance Reform Lobby: 1994-
2004, available at http://www.fecinfo.com/cgi-win/
cfg_summary.exe?DoFn=; see also Ryan Sager, Buying ``Reform, N.Y. Post, 
Mar. 17, 2005, at 33 (``Campaign-Finance reform has been an immense 
scam perpetrated on the American people by a cadre of left-wing 
foundations and disguised as a `mass movement.' '').
---------------------------------------------------------------------------
    Finally, we were told that BCRA would enable the average 
person to have a greater influence on the political process. 
However, that's not how things have turned out. BCRA's 
complexities and ambiguities, combined with its harsh 
penalties, have increasingly made the federal political process 
the exclusive province of the rich, the sophisticated, and the 
well-connected. And it is now becoming unclear whether the 
Internet, which has been a revolutionary tool for engaging the 
American citizenry in the democratic process, will remain a 
dynamic, unfettered, and accessible medium forexchanging 
political ideas if we do not act to prevent the heavy hand of 
government from imposing burdensome regulations governing online 
political speech. Thus, BCRA was supposed to enhance the voice of the 
average citizen, but instead, it has increasingly frozen out the 
average citizen from the political process.
    In his dissent in the McConnell case, Justice Clarence 
Thomas remarked about the self-perpetuating nature of campaign 
finance regulation: ``Every law has limits, and there will 
always be behavior not covered by the law but at its edges; 
behavior easily characterized as `circumventing' the law's 
prohibition. Hence, speech regulation will again expand to 
cover new forms of `circumvention,' only to spur supposed 
circumvention of the new regulations, and so forth. [This then 
turns into a] never-ending and self-justifying process.'' \27\ 
The clamor of the reformers for additional legislation to plug 
existing ``loopholes'' in BCRA provides further evidence of 
Justice Thomas's main point: regulation begets further 
regulation. Instead of blindly going down the path of more and 
more regulation, much of which is counterproductive, H.R. 1316 
seeks to--in the words of its co-author, Congressman Pence--
``inject[ ] more freedom into the campaign system.''
---------------------------------------------------------------------------
    \27\ McConnell, 540 U.S. at 268-69.
---------------------------------------------------------------------------
    H.R. 1316 strengthens our political parties by removing 
unnecessary regulatory obstacles that hinder the parties' 
ability to raise money and communicate with their candidates 
and also buttresses the ability of state and local parties to 
engage in traditional party functions, like voter registration 
and distributing sample ballots. It updates and indexes 
outdated limits. It sheds more sunlight on the activities of 
527 groups, ensures that foreign nationals cannot influence 
American elections through contributions to such groups, and 
enables non-profit organizations to broadcast electioneering 
communications on equal terms with 527s. It protects the 
ability of our citizens to participate in the national 
political dialogue using Internet web sites and blogs without 
fear of being subject to complex regulation. And it bolsters 
the First Amendment rights of federal officeholders and 
candidates to fully participate in elections in their home 
states and in the communities they represent.
    It is also important to note what H.R. 1316 does not do. It 
does not repeal the soft money ban in BCRA. It does not lift 
the prohibition on federal officeholders and candidates 
soliciting soft money. And it does not repeal the individual 
limits on contributions to candidates, parties, and PACs. Thus, 
H.R. 1316 is a narrowly tailored bill designed to correct 
current deficiencies and distortions in our nation's campaign 
finance system and to make it fairer and more balanced for 
everyone.

                       Summary of the Legislation

    Section 1.--Short Title: The ``527 Fairness Act of 2005.''
    Section 2.--Repeal of Aggregate Limit on Contributions by 
Individuals.
           Repeals the limit on the total amount of 
        contributions that an individual may give to candidates 
        and committees during an election cycle.
    Under current law, an individual is subject to a $101,400 
aggregate contribution limit during a two-year election cycle. 
This aggregate limit forces national, state, and local party 
committees and PACs to compete against each one another for a 
donor's dollars, since an individual is prohibited from giving 
a maximum contribution to each group. This competition has been 
especially harmful to state and local parties.
    The removal of the ceiling on total contributions will 
encourage more giving to party committees, candidates, and 
other groups subject to disclosure and contribution limits and 
less to unaccountable outside groups. In addition, the 
unproductive competition among party committees and PACs will 
cease.
    Note: this provision affects only the aggregate 
contribution limit and does not repeal the limits on what a 
person may give to any one candidate or committee.
    Section 3.--Repeal of Limit on Amount of Party Expenditures 
on Behalf of Candidates in General Elections.
           Repeals the limit on expenditures 
        coordinated between party committees and their 
        candidates.
    Political parties are currently able to make unlimited 
independent expenditures on behalf of their Senate and House 
candidate but are limited in the amount of coordinated 
expenditures they may make. This disparity is premised on the 
untenable notion that candidates are potentially in danger of 
being corrupted by their own parties. As FEC Commissioner 
Michael Toner has pointed out, ``These Draconian party spending 
limits are an anachronism and serve no legislative purpose. . . 
. Given that every single dollar that a political party wishes 
to spend on coordinated expenditures must be made out of hard 
money, there is no anti-corruption rationale for continuing to 
limit these party expenditures.'' \28\ Therefore, this 
provision removes the wedge that's been driven between parties 
and their own candidates.
---------------------------------------------------------------------------
    \28\ Michael E. Toner, Pass Pence-Wynn So We Can Fix Coordinated 
Expenditures, Roll Call, Jun. 15, 2005, at 4.
---------------------------------------------------------------------------
    Section 4.--Increase in Contribution Limits for Political 
Committees.
           Increases the limit on contributions made to 
        or by PACs from $5,000 to $7,500.
           Increases the limit on PAC contributions to 
        national party committees from $15,000 to $25,000, thus 
        putting PACs on equal footing with individuals.
    The PAC contribution limits have not been raised since 
1974; consequently, their value has been eroded by inflation. 
In fact, had the PAC limit set in 1974 been indexed for 
inflation, the current limit would be $19,716.\29\ Therefore, 
the PAC contribution limits are long overdue for this very 
modest increase.
---------------------------------------------------------------------------
    \29\ This figure was reached using the inflation calendar available 
on web site for the Department of Labor's Bureau of Labor Statistics < 
http://www.bls.gov/cpi/home.htm> (accessed Jun. 15, 2005).
---------------------------------------------------------------------------
    Section 5.--Indexing of All Contribution Limits.
           Indexes the contribution limits for PACs.
           Indexes the contribution limits for state 
        party committees.
    BCRA permits the indexing of some contribution limits for 
inflation but inexplicably leaves other limits unindexed. This 
provision will ensure that all contribution limits are 
periodically adjusted to account for inflation.
    Section 6.--Permitting Transfers between Leadership 
Committees and National Party Committees.
           Permits unlimited transfers between 
        leadership PACs and national party committees.
    Under current law, a candidate's authorized campaign 
committee may make unlimited transfers to a national party 
committee, but a candidate's leadership PAC may not. There is 
no reason for this disparate treatment. Thus, this provision 
puts leadership PACs at parity with authorized campaign 
committees.
    Section 7.--Increase in Threshold of Contributions and 
Expenditures Required for Determining Treatment as Political 
Committee.
           Raises the political committee registration 
        threshold to $10,000.
    This provision protects small political organizations from 
the requirement of registering and reporting with the FEC. 
Under current law, if a group raises or spends a mere $1,000 in 
connection with a federal election, it has to register with the 
FEC as a political committee. This $1,000 threshold has been in 
place since 1974 and, thus, needs to be updated to account for 
inflation.
    Section 8.--Prohibiting Contributions and Donations to 
Section 527 Organizations by Foreign Nationals.
           Prohibits foreign nationals from making 
        contributions to 527 groups.
    This provision strengthens the foreign money ban in 2 
U.S.C. Sec. 441e by explicitly prohibiting foreign nationals 
from making contributions to 527 organizations. Neither the 
Federal Election Campaign Act nor the Internal Revenue Code 
specifically bars foreign nationals from donating to 527 
groups. This provision corrects that omission.
    Section 9.--Requiring Section 527 Organizations to Submit 
Reports under Federal Election Campaign Act of 1971.
           Requires 527 groups to file reports with the 
        FEC in the same manner, under the same terms and 
        conditions, and at the same times applicable to federal 
        political committees.
    Section 10.--Permitting Expenditures for Electioneering 
Communications by Certain Organizations.
           Permits incorporated 501(c)(4), (c)(5) 
        [labor organizations], and (c)(6) [trade associations] 
        to engage in electioneering communications provided 
        such communications are paid for with funds donated by 
        individual American citizens.
    This provision repeals the Wellstone Amendment, which 
restricted electioneering communications by incorporated 
grassroots organizations. The Wellstone Amendment, which was 
not included in the original version of BCRA and which Senators 
McCain and Feingold voted against, prohibited incorporated 
501(c) organizations from engaging in electioneering 
communications on equal terms with 527 groups. This provision 
ends this unfair treatment by permitting incorporated 501(c) 
organizations to make electioneering communications so long as 
they are funded by contributions from individuals.
    Section 11.--Expanding Ability of Corporations and Labor 
Organizations to Communicate with Members.
           Allows corporate and labor union PACs to 
        solicit their ``restricted classes'' using fax machines 
        or e-mail.
           Removes the ``prior approval'' restriction 
        on solicitations by trade association PACs.
           Permits more than one trade association to 
        solicit the restricted class of a member company.
    Under current law, trade associations may not solicit 
contributions from the administrative personnel and 
stockholders of a member company without prior written approval 
from the company, and a member company may only grant approval 
to one trade association. This provision removes this 
unnecessary and burdensome restriction.
    Moreover, current law permits corporations and labor unions 
to solicit their rank-and-file employees twice a year but only 
by mail. This provision updates the law to allow the use of 
other common delivery methods (such as e-mail or fax).
    Section 12.--Permitting State and Local Parties to Use 
Nonfederal Funds for Voter Registration and Sample Ballots.
           Permits state and local parties to use 
        nonfederal funds for voter registration activities and 
        the production, printing, and distribution of sample 
        ballots.
    BCRA had the unfortunate effect of federalizing many 
activities that had traditionally been carried out at the state 
and local level, thus resulting in onerous restrictions being 
placed on state and local parties. This provision allows 
stateand local parties to use funds permitted under relevant state laws 
to engage in voter registration activities and to print and distribute 
sample ballots.
    Section 13.--Clarification of Authorization of Federal 
Candidates and Officeholders to Attend Fundraising Events for 
State or Local Parties.
           Permits federal officeholders and candidates 
        to attend and participate in state and local party 
        fundraisers without restriction or regulation.
    BCRA included language regarding federal officeholders and 
candidates participating in state and local party fundraisers. 
This provision clarifies the original intent of that language, 
which allows federal officeholders and candidates to attend and 
speak at such fundraisers without restriction or regulation.
    Section 14.--Modification of Definition of Public 
Communication.
           Excludes Internet communications from being 
        considered ``public communications.''
    This provision protects citizens who engage in the nation's 
political dialogue using Internet web sites and blogs from 
regulation under the federal campaign finance laws.
    Section 15.--Treatment of Candidate Communications 
Containing Endorsement by Federal Candidate or Officeholder.
           Allows federal officeholders and candidates 
        to endorse state, local, or other federal candidates 
        without such endorsements being considered coordinated 
        communications.
           Permits federal officeholders and candidates 
        to state their positions on state or local ballot 
        initiatives or referenda.
    BCRA places unfair and unreasonable restrictions on the 
ability of federal officeholders to fully participate in 
elections in their home states and in the communities they 
represent. This provision allows federal officeholders to 
endorse state and local candidates without such endorsements 
being considered coordinated contributions that must be paid 
for with federal hard dollars. It also permits federal 
officeholders to declare their positions on state ballot 
initiatives and to endorse other federal candidates.
    Section 16.--Severability.
           If any portion of the Act is found 
        unconstitutional, the other portions will remain in 
        effect.
    Section 17.--Effective Date.
           The provisions of the Act shall take effect 
        January 1, 2006.

                 Committee Consider of the Legislation


                       INTRODUCTION AND REFERRAL

    On March 15, 2005, Mr. Pence and Mr. Wynn introduced H.R. 
1316, the ``527 Fairness Act of 2005,'' which was referred to 
the Committee on House Administration.

                                HEARINGS

    The Committee on House Administration held a hearing on 
H.R. 1316 on April 20, 2005.
    Members present: Mr. Ney, Mr. Ehlers, Mr. Doolittle, Mr. 
Reynolds, Ms. Miller, Ms. Millender-McDonald, Mr. Brady, and 
Ms. Lofgren.
    Witnesses: The Honorable Christopher Shays, Member of 
Congress; The Honorable Martin Meehan, Member of Congress; The 
Honorable Mike Pence, Member of Congress; The Honorable Albert 
Wynn, Member of Congress; Cleta Mitchell, Partner, Foley & 
Lardner LLP; Robert Bauer, Partner, Perkins Coie LLP; and 
Laurence E. Gold, Associate General Counsel, AFL-CIO.

                                 MARKUP

    On June 8, 2005, the Committee met to mark up H.R. 1316. 
The Committee favorably reported H.R. 1316, as amended, by a 
record vote (6-3), a quorum being present.

             Matters Required Under the Rules of the House


                         COMMITTEE RECORD VOTES

    Clause 3(b) of House rule XIII requires the results of each 
record vote on an amendment or motion to report, together with 
the names of those voting for and against, to be printed in the 
committee report.

Amendment in the nature of a substitute

    Offered by Mr. Ney. The first vote during the markup came 
on the amendment in the nature of a substitute offered by Mr. 
Ney.
    The amendment lifts the aggregate election-cycle 
contribution limit; removes the limit on expenditures 
coordinated between party committees and candidates; raises the 
contribution limits for PACs; indexes all contribution limits 
for inflation; permits unlimited transfers between leadership 
PACs and national party committees; raises the political 
committee registration threshold to $10,000; prohibits 
contributions to 527 groups by foreign nationals; requires 527 
groups to report to the FEC; repeals the Wellstone Amendment 
that restricted electioneering communications by grassroots 
organizations; expands the ability of corporations and labor 
unions to communicate withmembers; allows state and local 
parties to use nonfederal funds for voter registration activities and 
sample ballots; clarifies the ability of federal officeholders to 
attend and participate in state and local party fundraisers; amends the 
Federal Election Campaign Act (``FECA'') to exclude Internet 
communications from being considered ``public communications''; allows 
federal officeholders to endorse state, local, and other federal 
candidates; and contains a severability clause.
    The vote on the amendment was 6-3 and the amendment was 
agreed to.

------------------------------------------------------------------------
                 Member                     Yes         No      Present
------------------------------------------------------------------------
Mr. Ney................................          X         --         --
Mr. Ehlers.............................          X         --         --
Mr. Mica...............................          X         --         --
Mr. Doolittle..........................          X         --         --
Mr. Reynolds...........................          X         --         --
Ms. Miller.............................          X         --         --
Ms. Millender-McDonald.................         --          X         --
Mr. Brady..............................         --          X         --
Ms. Lofgren............................         --          X         --
                                        --------------------------------
    Total..............................          6          3         --
------------------------------------------------------------------------

    The Committee then voted on H.R. 1316, as amended. The vote 
on the bill was 6-3 and the bill was agreed to.

------------------------------------------------------------------------
                 Member                     Yes         No      Present
------------------------------------------------------------------------
Mr. Ney................................          X         --         --
Mr. Ehlers.............................          X         --         --
Mr. Mica...............................          X         --         --
Mr. Doolittle..........................          X         --         --
Mr. Reynolds...........................          X         --         --
Ms. Miller.............................          X         --         --
Ms. Millender-McDonald.................         --          X         --
Mr. Brady..............................         --          X         --
Ms. Lofgren............................         --          X         --
                                        --------------------------------
    Total..............................          6          3         --
------------------------------------------------------------------------

    The Committee then voted to favorably report H.R. 1316, as 
amended. The vote to report favorably was approved by a 
recorded vote (6-3).

------------------------------------------------------------------------
                 Member                     Yes         No      Present
------------------------------------------------------------------------
Mr. Ney................................          X         --         --
Mr. Ehlers.............................          X         --         --
Mr. Mica...............................          X         --         --
Mr. Doolittle..........................          X         --         --
Mr. Reynolds...........................          X         --         --
Ms. Miller.............................          X         --         --
Ms. Millender-McDonald.................         --          X         --
Mr. Brady..............................         --          X         --
Ms. Lofgren............................         --          X         --
                                        --------------------------------
    Total..............................          6          3         --
------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) rule XIII of the Rules of 
the House of Representatives, the Committee states that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                General Performance Goals and Objectives

    The Committee states, with respect to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, that 
the goal and objective of H.R. 1316 is to restore fairness and 
balance to the federal campaign finance system.

                        Constitutional Authority

    In compliance with clause 3(d)(1) of rule XIII, the 
Committee states that Article 1, Section 4 of the U.S. 
Constitution grants Congress the authority to make laws 
governing the time, place and manner of holding Federal 
elections.

                            Federal Mandates

    The Committee states, with respect to section 423 of the 
Congressional Budget Act of 1974, that the bill does not 
include any significant Federal mandate.

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1974 
requires the report of any committee on a bill or joint 
resolution to include a committee statement on the extent to 
which the bill or joint resolution is intended to preempt state 
or local law. The Committee states that H.R. 1316 is not 
intended to preempt any state or local law.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, the following estimate and comparison 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 17, 2005.
Hon. Robert W. Ney,
Chairman, Committee on House Administration,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1316, the 527 
Fairness Act of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Matthew 
Pickford (for federal costs) and Paige Piper/Bach (for the 
private-sector impact).
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 1316--527 Fairness Act of 2005

    Summary: H.R. 1316 would make several amendments to the 
Federal Election Campaign Act of 1971. In particular the bill 
would:
           Require certain political organizations, as 
        defined by section 527 of the Internal Revenue Code, to 
        file reports with the Federal Election Commission 
        (FEC);
           Repeal the aggregate limit on campaign 
        contributions by individuals;
           Raise the limits on transfers between 
        certain political action committees and national party 
        committees;
           Remove spending limits on national political 
        parties;
           Increase limits on contributions to 
        political action committees and index the limits to 
        inflation; and
           Exempt Internet communications from campaign 
        finance rules.
    CBO estimates that implementing H.R. 1316 would cost about 
$1 million in fiscal year 2006, subject to the availability of 
appropriated funds. In future years, we estimate that the 
increased costs would not be significant. Enacting the bill 
also could affect federal revenues by increasing collections of 
fines and penalties for violating campaign finance laws, but 
CBO estimates that any such increase would not be significant.
    H.R. 1316 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments because the bill 
would specifically exclude state and local elections. H.R. 1316 
would impose a private-sector mandate as defined in UMRA on 
certain political organizations.CBO estimates that the direct 
cost of the mandate would fall well below the annual threshold 
established by UMRA for private-sector mandates ($123 million in 2005, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1316 is shown in the following table. 
The costs of this legislation fall within budget function 800 
(general government).


----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2006     2007     2008     2009     2010
----------------------------------------------------------------------------------------------------------------
                                CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\

Estimated Authorization Level......................................        1        *        *        *        *
Estimated Outlays..................................................        1        *        *        *       *
----------------------------------------------------------------------------------------------------------------
\1\ Enacting the bill could also increase revenues, but CBO estimates any such effects would be less than
  $500,000 a year.
Note.--* = less than $500,000.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the start of fiscal year 2006 and 
that spending will follow historical patterns for similar 
programs.
    Based on information from the FEC and subject to the 
availability of appropriated funds, CBO estimates that 
implementing H.R. 1316 would cost the FEC about $1 million in 
fiscal year 2006. This cost covers the one-time computer-
related expenses as well as writing new regulations to 
implement the new provisions of the legislation. In future 
years, the legislation would increase general administrative 
and maintenance costs to the FEC, but we estimate that those 
additional costs would not be significant.
    Enacting H.R. 1316 would likely increase collections of 
fines and penalties for violations of campaign finance law. 
Such collections are recorded in the budget as revenues. CBO 
estimates that the additional collections of penalties and 
fines would not be significant.
    Estimated impact on State, local, and tribal governments: 
H.R. 1316 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    Estimated impact on the private sector: H.R. 1316 would 
impose a private-sector mandate as defined in UMRA on certain 
political organizations. CBO estimates that the direct cost of 
the mandate would fall well below the annual threshold 
established by UMRA for private-sector mandates ($123 million 
in 2005, adjusted annually for inflation).
    The bill would require certain organizations registered 
under section 527 of the Internal Revenue Code that are filing 
financial reports with the Internal Revenue Service to file 
periodic reports with the FEC as well. Based on information 
from government sources, the direct cost of complying with the 
mandate would be minimal.
    Estimate prepared by: Federal Costs: Matthew Pickford. 
Impact on State, Local, and Tribal Governments: Marjorie 
Miller. Impact on the Private-Sector: Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

FEDERAL ELECTION CAMPAIGN ACT OF 1971

           *       *       *       *       *       *       *



            TITLE III--DISCLOSURE OF FEDERAL CAMPAIGN FUNDS


                              DEFINITIONS

  Sec. 301. When used in this Act:
  (1) * * *

           *       *       *       *       *       *       *

  (4) The term ``political committee'' means--
          (A) any committee, club, association, or other group 
        of persons which receives contributions aggregating in 
        excess of [$1,000] $10,000 during a calendar year or 
        which makes expenditures aggregating in excess of 
        [$1,000] $10,000 during a calendar year; or

           *       *       *       *       *       *       *

          (C) any local committee of a political party which 
        receives contributions aggregating in excess of 
        [$5,000] $10,000 during a calendar year, or makes 
        payments exempted from the definition of contribution 
        or expenditure as defined in section 301 (8) and (9) 
        aggregating in excess of [$5,000] $10,000 during a 
        calendar year, or makes contributions aggregating in 
        excess of [$1,000] $10,000 during a calendar year or 
        makes expenditures aggregating in excess of [$1,000] 
        $10,000 during a calendar year.

           *       *       *       *       *       *       *

          (20) Federal election activity.--
                  (A) In general.--The term ``Federal election 
                activity'' means--
                          [(i) voter registration activity 
                        during the period that begins on the 
                        date that is 120 days before the date a 
                        regularly scheduled Federal election is 
                        held and ends on the date of the 
                        election;]
                          [(ii)] (i) voter identification, get-
                        out-the-vote activity, or generic 
                        campaign activity conducted in 
                        connection with an election in which a 
                        candidate for Federal office appears on 
                        the ballot (regardless of whether a 
                        candidate for State or local office 
                        also appears on the ballot);
                          [(iii)] (ii) a public communication 
                        that refers to a clearly identified 
                        candidate for Federal office 
                        (regardless of whether a candidate for 
                        State or local office is also mentioned 
                        or identified) and that promotes or 
                        supports a candidate for that office, 
                        or attacks or opposes a candidate for 
                        that office (regardless of whether the 
                        communication expressly advocates a 
                        vote for or against a candidate); or
                          [(iv)] (iii) services provided during 
                        any month by an employee of a State, 
                        district, or local committee of a 
                        political party who spends more than 25 
                        percent of that individual's 
                        compensated time during that month on 
                        activities in connection with a Federal 
                        election.
                  (B) Excluded activity.--The term ``Federal 
                election activity'' does not include an amount 
                expended or disbursed by a State, district, or 
                local committee of a political party for--
                          (i) a public communication that 
                        refers solely to a clearly identified 
                        candidate for State or local office, if 
                        the communication is not a Federal 
                        election activity described in 
                        subparagraph (A)(i) [or (ii)];

           *       *       *       *       *       *       *

                          (iii) the costs of a State, district, 
                        or local political convention; [and]
                          (iv) the costs of grassroots campaign 
                        materials, including buttons, bumper 
                        stickers, and yard signs, that name or 
                        depict only a candidate for State or 
                        local office[.];
                          (v) voter registration activities; 
                        and
                          (vi) the costs incurred with the 
                        preparation of a sample ballot for an 
                        election in which a candidate for 
                        Federal office and a candidate for 
                        State or local office appears on the 
                        ballot.

           *       *       *       *       *       *       *

          (22) Public communication.--The term ``public 
        communication'' means a communication by means of any 
        broadcast, cable, or satellite communication, 
        newspaper, magazine, outdoor advertising facility, mass 
        mailing, or telephone bank to the general public, or 
        any other form of general public political advertising. 
        Such term shall not include communications over the 
        Internet.

           *       *       *       *       *       *       *


                                REPORTS

  Sec. 304. (a)(1) * * *

           *       *       *       *       *       *       *

  (13)(A) Except as provided in subparagraph (B), each 
organization described in section 527 of the Internal Revenue 
Code of 1986 shall submit a report under this section in the 
same manner, under the same terms and conditions, and at the 
same times applicable to a political committee which is not an 
authorized committee of a candidate or a national committee of 
a political party.
  (B) Subparagraph (A) does not apply to an organization 
described in section 527(j)(5)(B) of the Internal Revenue Code 
of 1986 (relating to a State or local committee of a political 
party or political committee of a State or local candidate).

           *       *       *       *       *       *       *

  (f) Disclosure of Electioneering Communications.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Electioneering communication.--For purposes of 
        this subsection--
                  (A) * * *
                  (B) Exceptions.--The term ``electioneering 
                communication'' does not include--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iv) any other communication exempted 
                        under such regulations as the 
                        Commission may promulgate (consistent 
                        with the requirements of this 
                        paragraph) to ensure the appropriate 
                        implementation of this paragraph, 
                        except that under any such regulation a 
                        communication may not be exempted if it 
                        meets the requirements of this 
                        paragraph and is described in [section 
                        301(20)(A)(iii)] section 
                        301(20)(A)(ii).

           *       *       *       *       *       *       *


             LIMITATIONS ON CONTRIBUTIONS AND EXPENDITURES

  Sec. 315. (a)(1) Except as provided in subsection (i) and 
section 315A, no person shall make contributions--
          (A) * * *

           *       *       *       *       *       *       *

          (C) to any other political committee (other than a 
        committee described in subparagraph (D)) in any 
        calendar year which, in the aggregate, exceed [$5,000] 
        $7,500; or

           *       *       *       *       *       *       *

  (2) No multicandidate political committee shall make 
contributions--
          (A) to any candidate and his authorized political 
        committees with respect to any election for Federal 
        office which, in the aggregate, exceed [$5,000] $7,500;
          (B) to the political committees established and 
        maintained by a national political party, which are not 
        the authorized political committees of any candidate, 
        in any calendar year, which, in the aggregate, exceed 
        [$15,000] $25,000; or
          (C) to any other political committee in any calendar 
        year which, in the aggregate, exceed [$5,000] $7,500.
  [(3) During the period which begins on January 1 of an odd-
numbered year and ends on December 31 of the next even-numbered 
year, no individual may make contributions aggregating more 
than--
          [(A) $37,500, in the case of contributions to 
        candidates and the authorized committees of candidates;
          [(B) $57,500, in the case of any other contributions, 
        of which not more than $37,500 may be attributable to 
        contributions to political committees which are not 
        political committees of national political parties.]
  (4)(A) The limitations on contributions contained in 
paragraphs (1) and (2) do not apply to transfers between and 
among political committees which are national, State, district, 
or local committees (including any subordinate committee 
thereof) of the same political party. For purposes of paragraph 
(2), the term ``multicandidate political committee'' means a 
political committee which has been registered under section 303 
for a period of not less than 6 months, which has received 
contributions from more than 50 persons, and, except for any 
State political party organization, has made contributions to 5 
or more candidates for Federal office.
  (B) The limitations on contributions contained in paragraphs 
(1) and (2) do not apply to transfers between a leadership 
committee of an individual holding Federal office and political 
committees established and maintained by a national political 
party. For purposes of the previous sentence, the term 
``leadership committee'' means, with respect to an individual 
holding Federal office, an unauthorized political committee 
which is associated with such individual but which is not 
affiliated with any authorized committee of such individual.

           *       *       *       *       *       *       *

  (7) For purposes of this subsection--
          (A) * * *

           *       *       *       *       *       *       *

          (C) if--
                  (i) * * *
                  (ii) subject to paragraph (9), such 
                disbursement is coordinated with a candidate or 
                an authorized committee of such candidate, a 
                Federal, State, or local political party or 
                committee thereof, or an agent or official of 
                any such candidate, party, or committee;

           *       *       *       *       *       *       *

  (9)(A) For purposes of paragraph (7)(C), a disbursement for 
an electioneering communication which refers to a candidate for 
Federal office shall not be treated as a disbursement which is 
coordinated with such candidate solely on the ground that the 
communication contains a State or local endorsement or (in the 
case of a communication containing a State or local 
endorsement) that the candidate reviewed, approved, or 
otherwise participated in the preparation and dissemination of 
the communication.
  (B) In subparagraph (A), the term ``State or local 
endorsement'' means, with respect to a candidate for Federal 
office--
          (i) an endorsement by such candidate of a candidate 
        for State or local office or of another candidate for 
        Federal office; or
          (ii) a statement of the position of such candidate on 
        a State or local ballot initiative or referendum.

           *       *       *       *       *       *       *

  (c)(1)(A) * * *
  [(B) Except as provided in subparagraph (C), in any calendar 
year after 2002--
          [(i) a limitation established by subsections 
        (a)(1)(A), (a)(1)(B), (a)(3), (b), (d), or (h) shall be 
        increased by the percent difference determined under 
        subparagraph (A);
          [(ii) each amount so increased shall remain in effect 
        for the calendar year; and
          [(iii) if any amount after adjustment under clause 
        (i) is not a multiple of $100, such amount shall be 
        rounded to the nearest multiple of $100.]
  (B) Except as provided in subparagraph (C)--
          (i) in any calendar year after 2002--
                  (I) a limitation established by subsection 
                (a)(1)(A), (a)(1)(B), (b), or (h) shall be 
                increased by the percent difference under 
                subparagraph (A),
                  (II) each amount so increased shall remain in 
                effect for the calendar year, and
                  (III) if any amount after the adjustment made 
                under subclause (I) is not a multiple of $100, 
                such amount shall be rounded to the nearest 
                multiple of $100; and
          (ii) in any calendar year after 2006--
                  (I) a limitation established by subsection 
                (a)(1)(C), (a)(1)(D), or (a)(2) shall be 
                increased by the percent difference under 
                subparagraph (A),
                  (II) each amount so increased shall remain in 
                effect for the calendar year, and
                  (III) if any amount after the adjustment made 
                under subclause (I) is not a multiple of $100, 
                such amount shall be rounded to the nearest 
                multiple of $100.
  (C) In the case of limitations under [subsections (a)(1)(A), 
(a)(1)(B), (a)(3), and (h)] subsections (a) and (h), increases 
shall only be made in odd-numbered years and such increases 
shall remain in effect for the 2-year period beginning on the 
first day following the date of the last general election in 
the year preceding the year in which the amount is increased 
and ending on the date of the next general election.
  (2) For purposes of paragraph (1)--
          (A) * * *
          (B) the term ``base period'' means--
                  (i) for purposes of [subsections (b) and (d)] 
                subsection (b), calendar year 1974; [and]
                  (ii) for purposes of subsections (a)(1)(A), 
                (a)(1)(B), [(a)(3),] and (h), calendar year 
                2001[.]; and
                  (iii) for purposes of subsections (a)(1)(C), 
                (a)(1)(D), and (a)(2), calendar year 2005.
  (d)[(1)] Notwithstanding any other provision of law with 
respect to limitations on [expenditures or limitations on] 
amounts of expenditures or contributions, the national 
committee of a political party and a State committee of a 
political party, including any subordinate committee of a State 
committee, may make expenditures in connection with the general 
election campaign of candidates for [Federal office, subject to 
the limitations contained in paragraphs (2), (3), and (4) of 
this subsection] Federal office in any amount.
  [(2) The national committee of a political party may not make 
any expenditure in connection with the general election 
campaign of any candidate for President of the United States 
who is affiliated with such party which exceeds an amount equal 
to 2 cents multiplied by the voting age population of the 
United States (as certified under subsection (e)). Any 
expenditure under this paragraph shall be in addition to any 
expenditure by a national committee of a political party 
serving as the principal campaign committee of a candidate for 
the office of President of the United States.
  [(3) The national committee of a political party, or a State 
committee of a political party, including any subordinate 
committee of a State committee, may not make any expenditure in 
connection with the general election campaign of a candidate 
for Federal office in a State who is affiliated with such party 
which exceeds--
          [(A) in the case of a candidate for election to the 
        office of Senator, or of Representative from a State 
        which is entitled to only one Representative, the 
        greater of--
                  [(i) 2 cents multiplied by the voting age 
                population of the State (as certified under 
                subsection (e)); or
                  [(ii) $20,000; and
          [(B) in the case of a candidate for election to the 
        office of Representative, Delegate, or Resident 
        Commissioner in any other State, $10,000.
          [(4) Independent versus coordinated expenditures by 
        party.--
                  [(A) In general.--On or after the date on 
                which a political party nominates a candidate, 
                no committee of the political party may make--
                          [(i) any coordinated expenditure 
                        under this subsection with respect to 
                        the candidate during the election cycle 
                        at any time after it makes any 
                        independent expenditure (as defined in 
                        section 301(17)) with respect to the 
                        candidate during the election cycle; or
                          [(ii) any independent expenditure (as 
                        defined in section 301(17)) with 
                        respect to the candidate during the 
                        election cycle at any time after it 
                        makes any coordinated expenditure under 
                        this subsection with respect to the 
                        candidate during the election cycle.
                  [(B) Application.--For purposes of this 
                paragraph, all political committees established 
                and maintained by a national political party 
                (including all congressional campaign 
                committees) and all political committees 
                established and maintained by a State political 
                party (including any subordinate committee of a 
                State committee) shall be considered to be a 
                single political committee.
                  [(C) Transfers.--A committee of a political 
                party that makes coordinated expenditures under 
                this subsection with respect to a candidate 
                shall not, during an election cycle, transfer 
                any funds to, assign authority to make 
                coordinated expenditures under this subsection 
                to, or receive a transfer of funds from, a 
                committee of the political party that has made 
                or intends to make an independent expenditure 
                with respect to the candidate.]

           *       *       *       *       *       *       *

  (i) Increased Limit To Allow Response to Expenditures From 
Personal Funds.--
          (1) Increase.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Increased limit.--Except as provided in 
                clause (ii), for purposes of subparagraph (A), 
                if the opposition personal funds amount is 
                over--
                          [(i) 2 times the threshold amount, 
                        but not over 4 times that amount--
                                  [(I) the increased limit 
                                shall be 3 times the applicable 
                                limit; and
                                  [(II) the limit under 
                                subsection (a)(3) shall not 
                                apply with respect to any 
                                contribution made with respect 
                                to a candidate if such 
                                contribution is made under the 
                                increased limit of subparagraph 
                                (A) during a period in which 
                                the candidate may accept such a 
                                contribution;
                          [(ii) 4 times the threshold amount, 
                        but not over 10 times that amount--
                                  [(I) the increased limit 
                                shall be 6 times the applicable 
                                limit; and
                                  [(II) the limit under 
                                subsection (a)(3) shall not 
                                apply with respect to any 
                                contribution made with respect 
                                to a candidate if such 
                                contribution is made under the 
                                increased limit of subparagraph 
                                (A) during a period in which 
                                the candidate may accept such a 
                                contribution; and
                          [(iii) 10 times the threshold 
                        amount--
                                  [(I) the increased limit 
                                shall be 6 times the applicable 
                                limit;
                                  [(II) the limit under 
                                subsection (a)(3) shall not 
                                apply with respect to any 
                                contribution made with respect 
                                to a candidate if such 
                                contribution is made under the 
                                increased limit of subparagraph 
                                (A) during a period in which 
                                the candidate may accept such a 
                                contribution; and
                                  [(III) the limits under 
                                subsection (d) with respect to 
                                any expenditure by a State or 
                                national committee of a 
                                political party shall not 
                                apply.]
                          (i) 2 times the threshold amount, but 
                        not over 4 times that amount, the 
                        increased limit shall be 3 times the 
                        applicable limit;
                          (ii) 4 times the threshold amount, 
                        but not over 10 times that amount, the 
                        increased limit shall be 6 times the 
                        applicable limit; and
                          (iii) 10 times the threshold amount, 
                        the increased limit shall be 6 times 
                        the applicable limit.

           *       *       *       *       *       *       *

          (2) Time to accept contributions under increased 
        limit.--
                  (A) In general.--Subject to subparagraph (B), 
                a candidate and the candidate's authorized 
                committee shall not accept any contribution[, 
                and a party committee shall not make any 
                expenditure,] under the increased limit under 
                paragraph (1)--
                          (i) * * *
                          (ii) to the extent that such 
                        contribution, when added to the 
                        aggregate amount of contributions 
                        previously accepted [and party 
                        expenditures previously made] under the 
                        increased limits under this subsection 
                        for the election cycle, exceeds 110 
                        percent of the opposition personal 
                        funds amount.
                  (B) Effect of withdrawal of an opposing 
                candidate.--A candidate and a candidate's 
                authorized committee shall not accept any 
                contribution [and a party shall not make any 
                expenditure] under the increased limit after 
                the date on which an opposing candidate ceases 
                to be a candidate to the extent that the amount 
                of such increased limit is attributable to such 
                an opposing candidate.

           *       *       *       *       *       *       *


  MODIFICATION OF CERTAIN LIMITS FOR HOUSE CANDIDATES IN RESPONSE TO 
                PERSONAL FUND EXPENDITURES OF OPPONENTS

  Sec. 315A. (a) Availability of Increased Limit.--
          (1) In general.--Subject to paragraph (3), if the 
        opposition personal funds amount with respect to a 
        candidate for election to the office of Representative 
        in, or Delegate or Resident Commissioner to, the 
        Congress [exceeds $350,000--
                  [(A) the limit under subsection (a)(1)(A) 
                with respect to the candidate shall be tripled;
                  [(B) the limit under subsection (a)(3) shall 
                not apply with respect to any contribution made 
                with respect to the candidate if the 
                contribution is made under the increased limit 
                allowed under subparagraph (A) during a period 
                in which the candidate may accept such a 
                contribution; and
                  [(C) the limits under subsection (d) with 
                respect to any expenditure by a State or 
                national committee of a political party on 
                behalf of the candidate shall not apply.] 
                exceeds $350,000, the limit under subsection 
                (a)(1)(A) with respect to the candidate shall 
                be tripled.

           *       *       *       *       *       *       *

          (3) Time to accept contributions under increased 
        limit.--
                  (A) In general.--Subject to subparagraph (B), 
                a candidate and the candidate's authorized 
                committee shall not accept any contribution[, 
                and a party committee shall not make any 
                expenditure,] under the increased limit under 
                paragraph (1)--
                          (i) * * *
                          (ii) to the extent that such 
                        contribution, when added to the 
                        aggregate amount of contributions 
                        previously accepted [and party 
                        expenditures previously made] under the 
                        increased limits under this subsection 
                        for the election cycle, exceeds 100 
                        percent of the opposition personal 
                        funds amount.
                  (B) Effect of withdrawal of an opposing 
                candidate.--A candidate and a candidate's 
                authorized committee shall not accept any 
                contribution [and a party shall not make any 
                expenditure] under the increased limit after 
                the date on which an opposing candidate ceases 
                to be a candidate to the extent that the amount 
                of such increased limit is attributable to such 
                an opposing candidate.

           *       *       *       *       *       *       *


CONTRIBUTIONS OR EXPENDITURES BY NATIONAL BANKS, CORPORATIONS, OR LABOR 
                             ORGANIZATIONS

  Sec. 316. (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (4)(A) * * *
  (B) It shall not be unlawful under this section for a 
corporation, a labor organization, or a separate segregated 
fund established by such corporation or such labor 
organization, to make 2 written solicitations for contributions 
during the calendar year from any stockholder, executive or 
administrative personnel, or employee of a corporation or the 
families of such persons. A solicitation under this 
subparagraph may be made [only by mail addressed] only by 
communications addressed or otherwise delivered to 
stockholders, executive or administrative personnel, or 
employees at their residence and shall be so designed that the 
corporation, labor organization, or separate segregated fund 
conducting such solicitation cannot determine who makes a 
contribution of $50 or less as a result of such solicitation 
and who does not make such a contribution.

           *       *       *       *       *       *       *

  (D) This paragraph shall not prevent a trade association or a 
separate segregated fund established by a trade association 
from soliciting contributions from the stockholders and 
executive or administrative personnel of the member 
corporations of such trade association and the families of such 
stockholders or personnel [to the extent that such solicitation 
of such stockholders and personnel, and their families, has 
been separately and specifically approved by the member 
corporation involved, and such member corporation does not 
approve any such solicitation by more than one such trade 
association in any calendar year].

           *       *       *       *       *       *       *

  (c) Rules Relating to Electioneering Communications.--
          (1) * * *
          (2) Exception.--Notwithstanding paragraph (1), the 
        term ``applicable electioneering communication'' does 
        not include a communication by a [section 501(c)(4) 
        organization] section 501(c)(4), (5), or (6) 
        organization or a political organization (as defined in 
        section 527(e)(1) of the Internal Revenue Code of 1986) 
        made under section 304(f)(2)(E) or (F) of this Act if 
        the communication is paid for exclusively by funds 
        provided directly by individuals who are United States 
        citizens or nationals or lawfully admitted for 
        permanent residence (as defined in section 101(a)(20) 
        of the Immigration and Nationality Act (8 U.S.C. 
        1101(a)(20))). For purposes of the preceding sentence, 
        the term ``provided directly by individuals'' does not 
        include funds the source of which is an entity 
        described in subsection (a) of this section.
          (3) Special operating rules.--
                  (A) * * *
                  (B) Exception under paragraph (2).--A 
                [section 501(c)(4) organization] section 
                501(c)(4), (5), or (6) organization that 
                derives amounts from business activities or 
                receives funds from any entity described in 
                subsection (a) shall be considered to have paid 
                for any communication out of such amounts 
                unless such organization paid for the 
                communication out of a segregated account to 
                which only individuals can contribute, as 
                described in section 304(f)(2)(E).
          (4) Definitions and rules.--For purposes of this 
        subsection--
                  (A) the term ``[section 501(c)(4) 
                organization] section 501(c)(4), (5), or (6) 
                organization'' means--
                          (i) an organization described in 
                        [section 501(c)(4) of the Internal 
                        Revenue Code of 1986] paragraph (4), 
                        (5), or (6) of section 501(c) of the 
                        Internal Revenue Code of 1986 and 
                        exempt from taxation under section 
                        501(a) of such Code; or
                          (ii) an organization which has 
                        submitted an application to the 
                        Internal Revenue Service for 
                        determination of its status as an 
                        organization described in clause (i); 
                        and

           *       *       *       *       *       *       *

          (5) Coordination with internal revenue code.--Nothing 
        in this subsection shall be construed to authorize an 
        organization exempt from taxation under section 501(a) 
        of the Internal Revenue Code of 1986 to carry out any 
        activity which is prohibited under such Code[.], or to 
        affect the treatment under such Code of any 
        expenditures described in section 527(e) of such Code 
        which are made by a section 501(c)(4), (5), or (6) 
        organization.
          [(6) Special rules for targeted communications.--
                  [(A) Exception does not apply.--Paragraph (2) 
                shall not apply in the case of a targeted 
                communication that is made by an organization 
                described in such paragraph.
                  [(B) Targeted communication.--For purposes of 
                subparagraph (A), the term ``targeted 
                communication'' means an electioneering 
                communication (as defined in section 304(f)(3)) 
                that is distributed from a television or radio 
                broadcast station or provider of cable or 
                satellite television service and, in the case 
                of a communication which refers to a candidate 
                for an office other than President or Vice 
                President, is targeted to the relevant 
                electorate.
                  [(C) Definition.--For purposes of this 
                paragraph, a communication is ``targeted to the 
                relevant electorate'' if it meets the 
                requirements described in section 
                304(f)(3)(C).]

           *       *       *       *       *       *       *


            CONTRIBUTIONS AND DONATIONS BY FOREIGN NATIONALS

  Sec. 319. (a) Prohibition.--It shall be unlawful for--
          (1) a foreign national, directly or indirectly, to 
        make--
                  (A) * * *
                  (B) a contribution or donation to a committee 
                of a political party; [or]
                  (C) a contribution or donation to an 
                organization described in section 527 of the 
                Internal Revenue Code of 1986; or
                  [(C)] (D) an expenditure, independent 
                expenditure, or disbursement for an 
                electioneering communication (within the 
                meaning of section 304(f)(3)); or
          (2) a person to solicit, accept, or receive a 
        contribution or donation described in subparagraph [(A) 
        or (B)] (A), (B), or (C) of paragraph (1) from a 
        foreign national.

           *       *       *       *       *       *       *


SEC. 323. SOFT MONEY OF POLITICAL PARTIES.

  (a) * * *
  (b) State, District, and Local Committees.--
          (1) * * *
          (2) Applicability.--
                  (A) In general.--Notwithstanding clause (i) 
                [or (ii)] of section 301(20)(A), and subject to 
                subparagraph (B), paragraph (1) shall not apply 
                to any amount expended or disbursed by a State, 
                district, or local committee of a political 
                party for an activity described in either such 
                clause to the extent the amounts expended or 
                disbursed for such activity are allocated 
                (under regulations prescribed by the 
                Commission) among amounts--
                          (i) * * *

           *       *       *       *       *       *       *

  (e) Federal Candidates.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Fundraising events.--Notwithstanding paragraph 
        (1) or subsection (b)(2)(C), a candidate or an 
        individual holding Federal office may attend, [speak,] 
        speak without restriction or regulation, or be a 
        featured guest at a fundraising event for a State, 
        district, or local committee of a political party.
          (4) Permitting certain solicitations.--
                  (A) General solicitations.--Notwithstanding 
                any other provision of this subsection, an 
                individual described in paragraph (1) may make 
                a general solicitation of funds on behalf of 
                any organization that is described in section 
                501(c) of the Internal Revenue Code of 1986 and 
                exempt from taxation under section 501(a) of 
                such Code (or has submitted an application for 
                determination of tax exempt status under such 
                section) (other than an entity whose principal 
                purpose is to conduct activities described in 
                [clauses (i) and (ii)] clause (i) of section 
                301(20)(A)) where such solicitation does not 
                specify how the funds will or should be spent.
                  (B) Certain specific solicitations.--In 
                addition to the general solicitations permitted 
                under subparagraph (A), an individual described 
                in paragraph (1) may make a solicitation 
                explicitly to obtain funds for carrying out the 
                activities described in [clauses (i) and (ii)] 
                clause (i) of section 301(20)(A), or for an 
                entity whose principal purpose is to conduct 
                such activities, if--
                          (i) * * *

           *       *       *       *       *       *       *

  (f) State Candidates.--
          (1) In general.--A candidate for State or local 
        office, individual holding State or local office, or an 
        agent of such a candidate or individual may not spend 
        any funds for a communication described in section 
        [301(20)(A)(iii)] 301(20)(A)(ii) unless the funds are 
        subject to the limitations, prohibitions, and reporting 
        requirements of this Act.

           *       *       *       *       *       *       *

                               APPENDIX A

                              ----------                              


               [From the Washington Post, Nov. 11, 2003]

Soros's Deep Pockets vs. Bush; Financier Contributes $5 Million More in 
                        Effort To Oust President

                         (By Laura Blumenfeld)

    New York.--George Soros, one of the world's richest men, 
has given away nearly $5 billion to promote democracy in the 
former Soviet bloc, Africa and Asia. Now he has a new project: 
defeating President Bush.
    ``It is the central focus of my life,'' Soros said, his 
blue eyes settled on an unseen target. The 2004 presidential 
race, he said in an interview, is ``a matter of life and 
death.''
    Soros, who has financed efforts to promote open societies 
in more than 50 countries around the world, is bringing the 
fight home, he said. On Monday, he and a partner committed up 
to $5 million to MoveOn.org, a liberal activist group, bringing 
to $15.5 million the total of his personal contributions to 
oust Bush.
    Overnight, Soros, 74, has become the major financial player 
of the left. He has elicited cries of foul play from the right. 
And with a tight nod, he pledged: ``If necessary, I would give 
more money.''
    ``America, under Bush, is a danger to the world,'' Soros 
said. Then he smiled: ``And I'm willing to put my money where 
my mouth is.''
    Soros believes that a ``supremacist ideology'' guides this 
White House. He hears echoes in its rhetoric of his childhood 
in occupied Hungary. ``When I hear Bush say, `You're either 
with us or against us,' it reminds me of the Germans.'' It 
conjures up memories, he said, of Nazi slogans on the walls, 
Der Feind Hort mit (``The enemy is listening''). ``My 
experiences under Nazi and Soviet rule have sensitized me,'' he 
said in a soft Hungarian accent.
    Soros's contributions are filling a gap in Democratic Party 
finances that opened after the restrictions in the 2002 McCain-
Feingold law took effect. In the past, political parties paid a 
large share of television and get-out-the-vote costs with 
unregulated ``soft money'' contributions from corporations, 
unions and rich individuals. The parties are now barred from 
accepting such money. But non-party groups in both camps are 
stepping in, accepting soft money and taking over voter 
mobilization.
    ``It's incredibly ironic that George Soros is trying to 
create a more open society by using an unregulated, under-the-
radar-screen, shadowy, soft-money group to do it,'' Republican 
National Committee spokeswoman Christine Iverson said. ``George 
Soros has purchased the Democratic Party.''
    In past election cycles, Soros contributed relatively 
modest sums. In 2000, his aide said, he gave $122,000, mostly 
to Democratic causes and candidates. But recently, Soros has 
grown alarmed at the influence of neoconservatives, whom he 
calls ``a bunch of extremists guided by a crude form of social 
Darwinism.''
    Neoconservatives, Soros said, are exploiting the terrorist 
attacks of Sept. 11, 2001, to promote a preexisting agenda of 
preemptive war and world dominion. ``Bush feels that on 
September 11th he was anointed by God,'' Soros said. ``He's 
leading the U.S. and the world toward a vicious circle of 
escalating violence.''
    Soros said he had been waking at 3 a.m., his thoughts 
shaking him ``like an alarm clock.'' Sitting in his robe, he 
wrote his ideas down, longhand, on a stack of pads. In January, 
Public Affairs will publish them as a book, ``The Bubble of 
American Supremacy'' (an excerpt appears in December's Atlantic 
Monthly). In it, he argues for a collective approach to 
security, increased foreign aid and ``preventive action.''
    ``It would be too immodest for a private person to set 
himself up against the president,'' he said. ``But it is, in 
fact''--he chuckled--``the Soros Doctorine.''
    His campaign began last summer with the help of Morton H. 
Halperin, a liberal think tank veteran. Soros invited 
Democratic strategists to his house in Southampton, Long 
Island, including Clinton chief of staff John D. Podesta, 
Jeremy Rosner, Robert Boorstin and Carl Pope.
    They discussed the coming election. Standing on the back 
deck, the evening sun angling into their eyes, Soros took aside 
Steve Rosenthal, CEO of the liberal activist group America 
Coming Together (ACT), and Ellen Malcolm, its president. They 
were proposing to mobilize voters in 17 battleground states. 
Soros told them he would give ACT $10 million.
    Asked about his moment in the sun, Rosenthal deadpanned: 
``We were disappointed. We thought a guy like George Soros 
could do more.'' Then he laughed. ``No, kidding! It was 
thrilling.''
    Malcolm: ``It was like getting his Good Housekeeping Seal 
of Approval.''
    ``They were ready to kiss me,'' Soros quipped.
    Before coffee the next morning, his friend Peter Lewis, 
chairman of the Progressive Corp., had pledged $10 million to 
ACT. Rob Glaser, founder and CEO of RealNetworks, promised $2 
million. Rob McKay, president of the McKay Family Foundation, 
gave $1 million and benefactors Lewis and Dorothy Cullman 
committed $500,000.
    Soros also promised up to $3 million to Podesta's new think 
tank, the Center for American Progress.
    Soros will continue to recruit wealthy donors for his 
campaign. Having put a lot of money into the war of ideas 
around the world, he has learned that ``money buys talent; you 
can advocate more effectively.''
    At his home in Westchester, N.Y., he raised $115,000 for 
Democratic presidential candidate Howard Dean. He also supports 
Democratic presidential contenders Sen. John F. Kerry (Mass.), 
retired Gen. Wesley K. Clark and Rep. Richard A. Gephardt 
(Mo.).
    In an effort to limit Soros's influence, the RNC sent a 
letter to Dean Monday, asking him to request that ACT and 
similar organizations follow the McCain-Feingold restrictions 
limiting individual contributions to $2,000.
    The RNC is not the only group irked by Soros. Fred 
Wertheimer, president of Democracy 21, which promotes changes 
in campaign finance, has benefited from Soros's grants over the 
years. Soros has backed altering campaign finance, an aide 
said, donating close to $18 million over the past seven years.
    ``There's some irony, given the supporting role he played 
in helping to end the soft money system,'' Wertheimer said. 
``I'm sorry that Mr. Soros has decided to put so much money 
into a political effort to defeat a candidate. We will be 
watchdogging him closely.''
    An aide said Soros welcomes the scrutiny. Soros has become 
as rich as he has, the aide said, because he has a 
preternatural instinct for a good deal.
    Asked whether he would trade his $7 billion fortune to 
unseat Bush, Soros opened his mouth. Then he closed it. The 
proposal hung in the air: Would he become poor to beat Bush?
    He said, ``If someone guaranteed it.''

                               APPENDIX B

                              ----------                              


                [From the New York Times; Jul. 29, 2004]

            A Delegate, a Fund-Raiser, and a Very Fine Line

                  (By Jim Rutenberg and Glen Justice)

    Boston.--Harold M. Ickes is a founder of an organization 
created to help defeat President Bush this fall, a group that 
he emphasizes operates wholly independently of the campaign of 
Senator John Kerry and the Democratic National Committee.
    But that has not stopped him from courting some of the 
Democrats' wealthiest donors here at the Four Seasons, a nexus 
of party operatives, Kerry campaign officials and friendly 
celebrities gathered for the party's convention this week. In a 
luxurious suite where guests nibble on chocolate ganache tarts 
and sip espresso, he asks them to give and give more.
    Then, in the evenings, this onetime White House deputy 
chief of staff throws on his credentials as a Democratic Party 
superdelegate and joins party functionaries gathered for the 
Democratic convention at the FleetCenter as one of their own.
    Just how precisely this squares with the new campaign 
finance law that allows such groups, known as 527 
organizations, to raise unlimited sums for politics so long as 
they do not coordinate with the candidates or the national 
parties depends on how much one takes Mr. Ickes's word about 
the distance between him and the Democrats.
    Advocates for stronger fund-raising regulation say that Mr. 
Ickes's four-star road show provides the most vivid example yet 
of how he and leaders of groups like his have all year been 
flouting the new fund-raising laws, drafted to stanch the flow 
of unlimited donations to parties and candidates.
    But Mr. Ickes and his colleagues say they are well within 
the boundaries of the law, and they are unapologetic. They say 
they are in no way coordinating their activities with the many 
party and campaign officials with whom they are rubbing elbows 
so frequently here this week, simply legally fishing for 
dollars in a fully stocked pond.
    ``We are here talking to donors,'' said Mr. Ickes, who was 
known for his command of fund-raising details and the fund-
raising law back when he worked for President Bill Clinton.
    ``We can talk to them anywhere--and we find this is a very 
efficient, effective place to talk to them,'' Mr. Ickes said.
    Erik Smith, head of the group Mr. Ickes founded, The Media 
Fund, put it more starkly: ``To quote Willie Sutton, `You rob 
banks because that's where the money is.'''
    When the new campaign finance law was debated in Congress 
its supporters argued that it would cut the tie between big 
money contributors and lawmakers. Its opponents countered that 
it would drive that money away from the national parties and 
into other, more opaque, affiliated groups that would operate 
like shadow political parties.
    The scene at the Four Seasons this week has shown just how 
close to the line of independence groups like The Media Fund--
which has been running advertisements against President Bush 
since March--can come.
    Just down the hallway from Mr. Ickes's second-floor suite 
in the Wendell Phillips Room is the registration office in the 
Winthrop Room, where fund-raisers pick up their special-access 
passes. As Mr. Ickes mingled with passers-by outside of his 
suite Wednesday afternoon, a parade of campaign and party 
officials walked by, including Bob Shrum, Mr. Kerry's chief 
strategist. Mr. Shrum and Mr. Ickes have worked on campaigns 
together like the David N. Dinkins New York mayoral campaigns 
of 1989 and 1993.
    Mr. Smith was also right near longtime comrades-in-arms. 
While Mr. Smith sat at a table in the Four Seasons lounge 
speaking with a reporter on Tuesday, Steve Elmendorf, Mr. 
Kerry's deputy campaign manager, who is staying at a nearby 
hotel, passed by the window. Mr. Elmendorf was a senior adviser 
for the presidential campaign of Representative Richard A. 
Gephardt of Missouri last fall when Mr. Smith was its press 
secretary.
    The proximity is hardly by chance. The hotel is not just 
the base of operation for Mr. Smith, Mr. Ickes and yet another 
group for which Mr. Ickes is raising money, America Coming 
Together, but has also become a salon for top fund-raisers in 
the Kerry campaign and the Democratic Party.
    Mr. Ickes's hospitality suite, just up a sweeping staircase 
from the hotel lounge, is open to all--all, that is, but the 
news media. On Tuesday a reporter who was barred at the door 
spied Bill Press, the liberal former co-host of ``CNN 
Crossfire,'' mingling with visitors and signing copies of his 
book, ``Why Bush Must Go: Top 10 Reasons Why George Bush 
Doesn't Deserve a Second Term.'' (``I was glad to do it, they 
bought the books and gave them out to donors,'' he said.) On 
Wednesday, Donna Brazile, the campaign manager for Al Gore in 
2000, did the same, with her own book.
    ``People are coming in and we are grabbing them in the 
halls,'' said Ellen Malcolm, president of America Coming 
Together, who said she had met with more than 100 supporters at 
the hotel.
    But the intermingling of the avowed independent groups and 
Democratic officials is not restricted to the Four Seasons 
here. Environment 2004, an organization that runs a 527 
committee held a reception to thank donors on Monday at the 
Beacon Hill home of Cathy Douglas Stone, a Boston environmental 
activist. Among those who spoke were the columnist Arianna 
Huffington, the singer Carole King and Senator Maria Cantwell 
of Washington.
    On Monday Ms. Malcolm was on hand at an event honoring 
Representative Nancy Pelosi of California, the House minority 
leader, that drew dozens of lawmakers and major donors together 
to drink lemonade and iced tea in a garden atrium of the 
Isabella Stewart Gardner museum. Later that night, Ms. Malcolm, 
like Mr. Ickes, was on the convention floor.
    And Mr. Ickes is not the only official of a 527 group with 
delegate status. Simon Rosenberg, head of the New Democrat 
Network, a group running Spanish-language advertisements 
against Mr. Bush since March, said he sits on the convention's 
platform committee.
    It is all too much for campaign finance regulation 
advocates who pushed for the new rules and are here this week, 
too, to take it all in. ``They're supposed to be independent 
groups operating independently of the Democratic Party and the 
Kerry presidential campaign,'' said Fred Wertheimer, president 
of Democracy 21, a group which advocated for the new law. 
``Instead, they're going out of their way to brazenly and 
blatantly demonstrate that they are intertwined with the 
Democratic Party and the Democratic nominating convention.''
    Mr. Ickes replies that while he interacts with his old 
friends in Mr. Kerry's campaign, ``I talk to them, but I don't 
talk to them about their spending, they don't talk to me about 
our spending.'' He said, ``We are very arm's length--not 
Chinese wall, but brick wall.'' He added of his role as a 
delegate to the Democratic National Committee, that it is a 
position he is allowed to hold under campaign finance 
regulations.
    He has particularly drawn the ire of Mr. Wertheimer, who 
has filed complaints against the groups he is fund-raising for 
with the Federal Election Commission, complaints that are 
pending. The Media Fund has been credited with playing a 
crucial role in helping to beat back an advertising barrage 
that President Bush launched against Mr. Kerry when he emerged 
the winner of the Democratic primary season--and nearly broke. 
It has spent $28 million on advertisements against Mr. Bush in 
key states.
    With Mr. Kerry announcing that he will not run 
advertisements in August to save money for the fall, The Media 
Fund announced that it, in turn, would increase its advertising 
next month--another example, critics say, of how closely its 
strategy is tied to that of Mr. Kerry's campaign.
    Ms. Malcolm said she was downright angered by implications 
that she was doing anything untoward. ``It makes me mad and it 
personally offends me that people are implying that we are 
doing something wrong,'' she said. ``All we're trying to do is 
comply with the law.''
    Mr. Wertheimer said that at the very least, she and her 
colleagues should do a better job looking as if they were. 
``The perception here is there's a marriage taking place,'' he 
said.

                               APPENDIX C

                              ----------                              


  Comments of Mark Brewer, President, Association of State Democratic 
                                 Chairs

 ON PROPOSED REGULATIONS DEFINING FEDERAL ELECTION ACTIVITY AND ON THE 
PROPOSED REGULATION GOVERNING ALLOCATION OF SALARIES BY STATE AND LOCAL 
                            PARTY COMMITTEES

    On behalf of the Association of State Democratic Chairs, I 
am submitting comments on the proposed revision of the 
definition of federal election activity and on the treatment of 
certain salaries and wages paid by state, district and local 
party committees. Because these two rulemakings are related and 
will have substantial impact on operation of political parties 
at the state and local level, I have combined my comments into 
one document that I will file separately in each proceeding.
    The Commission initiated these rulemakings in response to 
United States District Court's decision in Shays v. Federal 
Election Commission. The District Court in overturning the 
Commission's regulation faulted the Commission for various 
shortcomings in the rulemaking process including failing to 
provide sufficient notice of the alternatives being considered, 
to explain the Commission's choice of rules and to demonstrate 
why the promulgated rules were consistent with the legislative 
objectives of Bipartisan Campaign Reform Act (BCRA). Each of 
these failings, should the appeals court agree that they were 
failings, is understandable given the compressed time period in 
which the Commission was required to act, the statute's use of 
vague undefined terms and the paucity of legislative history on 
critical aspects of the law. These procedural weaknesses in the 
promulgation of the Commission rules should not be considered 
as proof of substantive flaws in the rules themselves.
    In fact, the regulations that are now subject to Commission 
reconsideration are for the most part not only reasonable but 
in many instances to be preferred to alternatives that the 
Commission is now considering. The existing rules are easier to 
understand and take into account the daily practicalities of 
running a state or local committee. State and local party 
committees operate in a very complex regulatory environment. No 
other political committees are asked to manage such Byzantine 
rules. The proposed alternatives suggested in these rulemakings 
would impose even more complexity on state and local parties. 
The consequence of adopting some of these alternatives would be 
to push to the breaking point the ability of many party 
committees to comply.
    An unfortunate consequence of BCRA is that many state and 
local party committees are avoiding participating in grassroots 
political activity because federa1 law poses compliance 
challenges that are beyond their ability to meet. If the 
Commission doubts that this is the case, it need only review 
how many federal reporting party committees received and spent 
Levin funds. Levin funds were intended to allow state and local 
parties to use nonfederal funds to finance grassroots activity. 
The fact that very few committees took advantage of Levin funds 
is testament to the fact that the rules were just too complex 
for state and local parties to comply. If these committees were 
able to marshal sufficient federal funds to pay for voter 
registration, voter identification and get-out-the-vote 
programs, this consequence of BCRA would be less regrettable. 
However, this was not the case, particularly at the local level 
and in states that were not Presidential targets. Instead of 
running the risk of violating federal law, many committees 
simply did not engage in federal election activity.
    Changing the rules as suggested in these rulemakings will 
only compound the problem. The thrust of the proposed rules is 
to subject more grassroots party activity to federal 
regulation. Subjecting more party activity to the complex 
allocation and reporting requirements of federal law will only 
accelerate the flow of these activities out of the party into 
less accountable political organizations. The changes proposed 
proceed from a basic misunderstanding of how local parties now 
operate.
    Local parties operate largely autonomously from the state 
and national committees. Most local committees are small 
volunteer centered organizations. These committees do not have 
nor could they afford the lawyers and accountants that have 
become necessary to comply with complexity of federal law. A 
common response to BCRA then was to avoid any activity that 
would trigger federal reporting obligations. These committees 
were advised to avoid engaging in voter registration, not to 
undertake any get-out-the-vote activity and to devote all paid 
staff to local elections. For most localcommittees, this was 
the only available survival strategy. Now some of the Commission's 
proposals will close off even this avenue. Below the alternatives 
offered in these rulemakings are explored and their shortcomings noted.
    In response to the District Court's concern that limiting 
the definition of voter registration to assisting voters in the 
actual act of registering may be too limiting and may ``unduly 
compromise the Act's purposes'', the Commission asks whether 
encouraging someone to register combined with some direction on 
how one registers should be included in the definition. 
Expanding the definition in this way would cover a voter 
calling his local party headquarters and asking where they 
could register. It would cover placing a stack of voter 
registration cards at the front desk. Presumably it would cover 
a party website where registration materials are available. 
Local committees that no longer register voters because they 
cannot practically comply with BCRA will be reduced to silence 
when a voter asks how or where to register. The practical 
consequence of expanding the definition of voter registration 
will be to mute core political speech.
    The Commission also seeks comments on whether it should 
reconsider the definition of get-out-the-vote activity. The 
Commission notes that Congress did not provide a definition. 
The District Court correctly pointed out that the list of get-
out-the-vote activity is not exhaustive and questioned what 
additional activity might be included. In response to the 
Court's decision, the Commission should make the list 
exhaustive. State and local party committees and groups of 
state and local candidates that are governed by this regulation 
are entitled to a clear and full statement of the governing 
rule.
    This regulation substantially impacts the right of state 
and local candidates to associate in their election efforts. In 
providing a list of covered activities the Commission should 
keep the list narrow. A broad reading of what constitutes get-
out-the-vote activity will severely impair the ability of local 
candidates to join in common effort to effect a shared 
political outcome. For local party committees a broad reading 
will shrink even further the political playing field. Without 
additional Congressional direction, the Commission should be 
chary of extending its jurisdiction over a broader swath of 
local candidate activity. The fact that the Commission has yet 
to provide state and local candidates with sufficient 
instruction and tools to comply with the existing regulation 
underscores the folly of expanding the range of covered 
activity.
     Again in response to the District Court's decision, the 
Commission proposes to redefine ``voter identification''. The 
proposed definition covers the acquisition ``of information 
about potential voters including, but not limited to, obtaining 
voter lists and creating or enhancing voter lists by verifying 
or adding information about the voter's likelihood of voting in 
an upcoming election or their likelihood of voting for specific 
candidates.'' This definition proceeds from a basic 
misunderstanding of how modern political parties operate. 
Political committees maintain or purchase access to large 
databases of people living in the United States. These 
databases are constantly sorted using various demographic, 
economic and personal criteria. New information is regularly 
appended or employed depending on the purpose that the database 
is being used.
    Because nearly every resident of the country is a potential 
voter, the proposed regulation would cover any and all uses of 
a party database. These databases are employed in fundraising, 
persuasion, volunteer recruitment and for a host of other 
purposes beyond get-out-the-activity. On the other hand, the 
term ``voter identification'' in the general political lexicon 
is used to refer to those activities, most commonly canvassing, 
that are undertaken in close proximity to the election to 
identify specific voters to target in a ``get-out-the-vote'' 
effort. Although not defined in BCRA, this is how the statute 
appears to use the term. The statute defines federal election 
activity to include ``(ii) voter identification, get-out-the-
vote activity, or generic campaign activity conducted in 
connection with an election in which a candidate for Federal 
office appears on the ballot''. Clearly the term is used in a 
restricted manner. It is addressed to activity tied directly to 
a Federal election and similar to or connected with the other 
activities cited. There is no statutory justification for 
giving a broader sweep to the term. There is no reason to 
expand the definition to cover all uses or additions to a 
database.
    The Association commends the Commission for proposing to 
rededefine the definition of ``in connection with an election 
in which a candidate for federal office appears on the 
ballot.'' The new definition recognizes that state and local 
committees spend much and in some cases all their time and 
money on local elections. In many states, years can pass 
between true federal contests. The focus of local parties is 
most often on municipal elections. The proposed regulation 
recognizes this fact and seeks to limit the federalization of 
state and local party activity that is directed at municipal 
elections. The Association urges its adoption.
    Lastly the Commission proposes revising the rule governing 
the allocation of salaries and wages by requiring state and 
local committees to allocate at least 25% of these costs to a 
Federal account whenever an employee engages in any Federal 
election activity or activity in connection with a Federal 
election. As explained above, most local committees are focused 
on state and local elections. These committees do not register 
with the Commission and do not maintain Federal and state 
accounts. They take care to avoid being subject to the 
recordkeeping, registration, reporting and allocation 
requirements of Federal law. The proposed regulation imposes 
these Federal obligations even where the Federal election 
activity is minimal. For example, the allocation requirement 
would be triggered if a staffer for a local committee in a 
college town spent a single day on campus registering students 
to vote. It is not enough that to be told that the Commission 
is unlikely to pursue such a violation. Party committees are 
not in the business of instructing their employees to 
disrespect the law because the committee is likely to escape 
punishment for violating the law.
    The District Court expressed concern that the current 
regulation opens an opportunity for gross abuse is mere 
speculation without any support in the legislative or 
administrative record. First, state and local committees simply 
do not employ sufficient numbers of staff to cleverly assign 
them monthly duties to assure that each stays below the 25% 
threshold. Second, where there is a highly contested Federal 
election in which a state or local committee is participating, 
the committee staff assigned to work on that race will devote 
more than 25% of their time to that race and therefore, will be 
100% allocated to the Federal account. The consequence will be 
over allocation which will more than compensate for any under 
allocation of other employees. If the Commission needs to be 
convinced of this fact, it should do a study of state and local 
committee staffing patterns. It should not proceed to further 
handicap local parties based on unfounded speculation of 
undocumented abuse. A review of state and local party activity 
in the last election will demonstrate that the District Court's 
concern found no expression in actual party activity.
    In closing, the proposed regulations are rooted in a basic 
misapprehension of the nature of state and local committees. 
These are not committees flush with resources and staffed with 
well paid professionals. Rarely is a Federal candidate in a 
position to control a committee. Federal elections are not 
their primary focus and as often as not the Federal election 
receives minimal, if any attention. The Commission can easily 
confirm these facts. The Commission's regulations should 
reflect what state and local committees actually do, rather 
than unfounded fears of wholesale circumvention of the law. 
Facts rather than wildly imagined corruptive schemes should 
guide the Commission. Visit a few local party committees and 
any fears will be allayed. Add to the complexity of the 
regulation and there will be fewer to visit.

     MINORITY VIEWS OF RANKING MEMBER JUANITA MILLENDER-McDONALD, 
     REPRESENTATIVE ROBERT A. BRADY, AND REPRESENTATIVE ZOE LOFGREN

    The House Administration Committee ordered H.R. 1316 
reported on a 6-3 vote. In our view, H.R. 1316 as a whole is 
not needed and does not accomplish the objectives that the 
Majority purports are needed to level the playing field between 
the major parties and 527 organizations. The bill also would 
increase the undue influence of a few wealthy individuals by 
repealing the aggregate limits on contributions. In essence, it 
rolls back not only the reforms of the Bipartisan Reform Act of 
2002 (BCRA), but the Federal Election Campaign Act of 1971 
(FECA), as amended in 1974, which placed limits on political 
contributions to candidates for federal elective office by an 
individual or a group, which were enacted in the wake of the 
Watergate scandals.

                                Preface

    H.R. 1316, under the pretext of addressing the need to 
regulate independent political organizations, will enhance the 
considerable financial advantage already enjoyed by the 
majority party and incumbent office holders. Some of the bill's 
provisions do so in such an obvious, flagrant manner that the 
constitutionality of H.R. 1316 is put into serious doubt. 
Nowhere is the constitutional defect more obvious than in 
section 6 of the bill, which allows Federal officeholders, and 
only Federal officeholders, the right to create special 
``leadership'' committees, which in turn can make unlimited 
transfers to national party committees. H.R. 1316 denies 
challengers this new perquisite of incumbency. Even if this 
defect were remedied by extending the privilege to non-
officeholders, it would be an empty gesture because few 
challengers would be able to take advantage of it.
    H.R. 1316 is motivated by fear more than fact. Spending by 
independent political organizations in 2004 congressional races 
was a traction of what the Republican Party was able to marshal 
in response. It is this immense partisan financial advantage 
that this bill is intended to secure. By removing effectively 
any limit on what an individual may contribute to a political 
party, and any limit on how that money can be spent, H.R. 1316 
is intended to entrench party power. BCRA imposed soft money 
limits on parties, while H.R. 1316 removes them. Under H.R. 
1316, the only limit on how much an individual may contribute 
in response to a party's, or a candidate's solicitation, is the 
creativity of the solicitor. Current law permits individuals to 
contribute over one hundred thousand dollars in an election 
cycle. The only people that will benefit from the removal of 
this limit are multi-millionaires and the party that most 
caters to them.
    It is instructive to note that the 527 activity that this 
bill appears most concerned about is the voter registration and 
get-out-the-vote activity that was not directed at particular 
Congressional candidates but at increasing participation. The 
supporters of H.R. 1316 may be troubled by this development, 
but it is far from clear that the public is. With both major 
political parties raising record sums in 2004, it is hard to 
discern the unfairness that the H.R. 1316 seeks to correct. 
Greater participation in elections, and more competitive 
elections, are not the hallmarks of a problem in need of a 
remedy. Recent Republican Party fundraising certainly should 
reassure the supporters of this bill that their party will 
continue to enjoy a sizable financial advantage, and will be 
able to come to their financial rescue at the first sign of any 
vulnerability.
    H.R. 1316's drive for ``fairness'' goes beyond enhancing 
the huge financial advantage already enjoyed by the party in 
power, to a concern about the ability of trade associations to 
circumvent the electioneering communications limitations of 
BCRA. Apparently the sponsors of H.R. 1316 do not believe that 
the managers of trade associations have sufficient freedom to 
employ the considerable resources and ingenuity of their trade 
associations to influence federal elections. H.R. 1316 removes 
the BCRA ban on electioneering communications by trade 
associations, and allows them to use individual membership dues 
and payments to fiance television and radio advertising 
attacking or promoting a federal candidate. To assure that 
trade associations can raise sufficient funds for this and 
other elections purposes, H.R. 1316 removes long standing 
restrictions on trade association solicitations. It is easy to 
see how these changes will play to the great advantage of 
incumbents and the party in power.
    The provisions of H.R. 1316, as a whole, are problematic 
and inconsistent with BCRA and FECA. We find that this bill has 
little to do with 527s, but everything to do with allowing the 
parties to collect more money from a few wealthy contributors. 
If H.R. 1316 becomes law, it will have the devastating effect 
of diluting the political voice of people of modest means, 
while magnifying the influence of wealthy contributors who, 
without the current restrictions, would be free to direct their 
wealth to a vast range of interests they support.
    This bill is most disturbing because it is such a blatant 
attempt to advantage incumbents and the majority party. As 
such, it is an abuse of power and a breach of the people's 
trust. Below is a more detailed review of this badly defective 
bill.

                            Principal Flaws

       REPEAL OF AGGREGATE LIMIT ON CONTRIBUTIONS BY INDIVIDUALS

    Repealing the aggregate limits on contributions by 
individuals will allow the wealthy populace to give millions of 
dollars to candidates and parties. Currently, an individual can 
give up to $101,400 to all political parties, PAC committees 
and candidates in a two year Federal election cycle. This 
amounts to a limit of $40,000 an individual can give to Federal 
candidates and $61,400 to political parties, and PAC 
committees. H.R. 1316 would allow an individual to give 
$160,200 to the three national committees of a political party, 
$1 million to the state party committees of that party ($20,000 
to each of the 50 state party committees) and $1,827,000 to 
each of the 435 house races for a particular party; for a total 
of almost $3 million. Fundamentally, it strips away the 
protections implemented by the FECA aggregate restrictions, 
which were put in place as a direct result of the Watergate 
scandals. We voted for BCRA to break the link between 
Federalofficeholders and candidates, and the undue influence of 
unregulated money given by wealthy individuals. This provision would 
re-open the door to individuals giving million-dollar contributions to 
federal officeholders and candidates for federal elections, in essence 
opening the ``hard money'' floodgates and converting ``hard money'' 
into ``soft money''.

REPEAL OF LIMIT ON AMOUNT OF PARTY EXPENDITURES ON BEHALF OF CANDIDATES 
                          IN GENERAL ELECTIONS

    By removing the caps on coordinated expenditures, H.R. 1316 
would allow a national party committee to completely underwrite 
multi-million dollar campaign(s) against any candidate(s) that 
it targets. Essentially, this provision would allow a political 
party to coordinate and spend unlimited amounts to support or 
defeat a candidate. Should this provision become law, unlimited 
resources will be put at the disposal of any vulnerable 
candidate who happens to be a member of the party in power? 
This legislation should not be passed for partisan gain.

 PERMITTING TRANSFERS BETWEEN LEADERSHIP COMMITTEES AND NATIONAL PARTY 
                               COMMITTEES

    H.R. 1316 would allow any Member of Congress to make 
unlimited transfers from their leadership PACs to national 
party committees. That Member of Congress could then control 
the spending of these transferred funds to support the Member's 
own campaign. Under current law, Members' leadership PAC funds 
are not supposed to be spent on the Member's campaign.
    Donors could give the maximum contribution allowed for a 
candidate's campaign and the maximum contribution allowed for a 
Member's leadership PAC, and all of these funds could end up 
being spent by the candidate on the candidate's campaign. As 
noted above, only incumbents enjoy this privilege. Contribution 
limits long an essential feature of the law are rendered 
meaningless. Members from noncompetitive districts holding 
positions of leadership in the House, and on committees, will 
be able to use their considerable legislative clout to raise, 
and to place at a vulnerable Member's disposable, almost 
unlimited funds. Few challengers, whether in a primary or a 
general election, will enjoy such a rich financial advantage. 
For them, the ``Fairness'' referenced in the title of this 
bill, will be forever elusive.

 PERMITTING EXPENDITURES FOR ELECTIONEERING COMMUNICATIONS BY CERTAIN 
                             ORGANIZATIONS

    H.R. 1316 would undermine a key BCRA restriction to prevent 
the use of non-federal money, more commonly referred to as 
``soft money'', to fund deceptive issue ads. Under this bill, 
trade associations would once more be allowed to use unlimited 
``soft money'' donations from individuals to pay for broadcast 
ads promoting and attacking federal candidates close to an 
election. Again, it is hard to imagine how this change will do 
anything other than benefit incumbents and the party in power.

                               Conclusion

    The proponents of this legislation are among the strongest 
opponents of BCRA, and are using public concern over 527's as a 
pretext for rolling back BCRA and the reforms put in place 
after the Watergate scandals. Passage of this bill would be a 
huge step backwards towards the unregulated six and seven 
figure donations which were common before BCRA became law. BCRA 
was intended to end this practice, and its perceived effect on 
the shaping of public policy to the benefit of the wealthy and 
influencial.
    We stand in agreement with a recent letter written by the 
Democratic leadership stating that limiting total campaign 
giving has been a cornerstone of fair and honest campaigns for 
a generation, and one of the most effective ways to prevent 
corruption and the appearance of corruption in our political 
process, and in the process of governing and shaping public 
policy.
    Democrats have stood proudly as the party of reform. H.R. 
1316 is a direct assault on this principle, and a step 
backwards into the preception of unseemliness at best, and 
influence peddling at its worst. Perceptions do matter, and 
H.R. 1316 should not become law.

                                   Juanita Millender-McDonald.
                                   Robert A. Brady.
                                   Zoe Lofgren.

                                  
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