House Report 109-181 - 527 REFORM ACT OF 2005

[House Report 109-181]
[From the U.S. Government Publishing Office]

109th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 109-181

======================================================================

527 REFORM ACT OF 2005

_______

July 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. 513]

[Including cost estimate of the Congressional Budget Office]

The Committee on House Administration, to whom was referred
the bill (H.R. 513) to amend the Federal Election Campaign Act
of 1971 to clarify when organizations described in section 527
of the Internal Revenue Code of 1986 must register as political
committees, and for other purposes, having considered the same,
report thereon with an amendment and without recommendation.
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 Reform Act of 2005''.

SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS.

(a) Definition of Political Committee.--Section 301(4) of the Federal
Election Campaign Act of 1971 (2 U.S.C. 431(4)) is amended--
(1) by striking the period at the end of subparagraph (C) and
inserting ``; or''; and
(2) by adding at the end the following:
``(D) any applicable 527 organization.''.
(b) Definition of Applicable 527 Organization.--Section 301 of such
Act (2 U.S.C. 431) is amended by adding at the end the following new
paragraph:
``(27) Applicable 527 organization.--
``(A) In general.--For purposes of paragraph (4)(D), the term
`applicable 527 organization' means a committee, club,
association, or group of persons that--
``(i) has given notice to the Secretary of the
Treasury under section 527(i) of the Internal Revenue
Code of 1986 that it is to be treated as an
organization described in section 527 of such Code; and
``(ii) is not described in subparagraph (B).
``(B) Excepted organizations.--A committee, club,
association, or other group of persons described in this
subparagraph is--
``(i) an organization described in section 527(i)(5)
of the Internal Revenue Code of 1986;
``(ii) an organization which is a committee, club,
association or other group of persons that is
organized, operated, and makes disbursements
exclusively for paying expenses described in the last
sentence of section 527(e)(2) of the Internal Revenue
Code of 1986 or expenses of a newsletter fund described
in section 527(g) of such Code;
``(iii) an organization which is a committee, club,
association, or other group that consists solely of
candidates for State or local office, individuals
holding State or local office, or any combination of
either, but only if the organization refers only to one
or more non-Federal candidates or applicable State or
local issues in all of its voter drive activities and
does not refer to a Federal candidate or a political
party in any of its voter drive activities; or
``(iv) an organization described in subparagraph (C).
``(C) Applicable organization.--For purposes of subparagraph
(B)(iv), an organization described in this subparagraph is a
committee, club, association, or other group of persons whose
election or nomination activities relate exclusively to--
``(i) elections where no candidate for Federal office
appears on the ballot; or
``(ii) one or more of the following purposes:
``(I) Influencing the selection, nomination,
election, or appointment of one or more
candidates to non-Federal offices.
``(II) Influencing one or more applicable
State or local issues.
``(III) Influencing the selection,
appointment, nomination, or confirmation of one
or more individuals to non-elected offices.
``(D) Exclusivity test.--A committee, club, association, or
other group of persons shall not be treated as meeting the
exclusivity requirement of subparagraph (C) if it makes
disbursements aggregating more than $1,000 for any of the
following:
``(i) A public communication that promotes, supports,
attacks, or opposes a clearly identified candidate for
Federal office during the 1-year period ending on the
date of the general election for the office sought by
the clearly identified candidate (or, if a runoff
election is held with respect to such general election,
on the date of the runoff election).
``(ii) Any voter drive activity during a calendar
year, except that no disbursements for any voter drive
activity shall be taken into account under this
subparagraph if the committee, club, association, or
other group of persons during such calendar year--
``(I) makes disbursements for voter drive
activities with respect to elections in only 1
State and complies with all applicable election
laws of that State, including laws related to
registration and reporting requirements and
contribution limitations;
``(II) refers to one or more non-Federal
candidates or applicable State or local issues
in all of its voter drive activities and does
not refer to any Federal candidate or any
political party in any of its voter drive
activities;
``(III) does not have a candidate for Federal
office, an individual who holds any Federal
office, a national political party, or an agent
of any of the foregoing, control or materially
participate in the direction of the
organization, solicit contributions to the
organization (other than funds which are
described under clauses (i) and (ii) of section
323(e)(1)(B)), or direct disbursements, in
whole or in part, by the organization; and
``(IV) makes no contributions to Federal
candidates.
``(E) Certain references to federal candidates not taken into
account.--For purposes of subparagraphs (B)(iii) and
(D)(ii)(II), a voter drive activity shall not be treated as
referring to a clearly identified Federal candidate if the only
reference to the candidate in the activity is--
``(i) a reference in connection with an election for
a non-Federal office in which such Federal candidate is
also a candidate for such non-Federal office; or
``(ii) a reference to the fact that the candidate has
endorsed a non-Federal candidate or has taken a
position on an applicable State or local issue,
including a reference that constitutes the endorsement
or position itself.
``(F) Certain references to political parties not taken into
account.--For purposes of subparagraphs (B)(iii) and
(D)(ii)(II), a voter drive activity shall not be treated as
referring to a political party if the only reference to the
party in the activity is--
``(i) a reference for the purpose of identifying a
non-Federal candidate;
``(ii) a reference for the purpose of identifying the
entity making the public communication or carrying out
the voter drive activity; or
``(iii) a reference in a manner or context that does
not reflect support for or opposition to a Federal
candidate or candidates and does reflect support for or
opposition to a State or local candidate or candidates
or an applicable State or local issue.
``(G) Applicable state or local issue.--For purposes of this
paragraph, the term `applicable State or local issue' means any
State or local ballot initiative, State or local referendum,
State or local constitutional amendment, State or local bond
issue, or other State or local ballot issue.''.
(c) Definition of Voter Drive Activity.--Section 301 of such Act (2
U.S.C. 431), as amended by subsection (b), is further amended by adding
at the end the following new paragraph:
``(28) Voter drive activity.--The term `voter drive activity' means
any of the following activities 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):
``(A) Voter registration activity.
``(B) Voter identification.
``(C) Get-out-the-vote activity.
``(D) Generic campaign activity.
``(E) Any public communication related to activities
described in subparagraphs (A) through (D).
Such term shall not include any activity described in subparagraph (A)
or (B) of section 316(b)(2).''.
(d) Regulations.--The Federal Election Commission shall promulgate
regulations to implement this section not later than 60 days after the
date of enactment of this Act.
(e) Effective Date.--The amendments made by this section shall take
effect on the date which is 60 days after the date of enactment of this
Act.

SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON-
FEDERAL ACTIVITIES.

(a) In General.--Title III of the Federal Election Campaign Act of
1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the
following:

``SEC. 325. ALLOCATION AND FUNDING RULES FOR CERTAIN EXPENSES RELATING
TO FEDERAL AND NON-FEDERAL ACTIVITIES.

``(a) In General.--In the case of any disbursements by any political
committee that is a separate segregated fund or nonconnected committee
for which allocation rules are provided under subsection (b)--
``(1) the disbursements shall be allocated between Federal
and non-Federal accounts in accordance with this section and
regulations prescribed by the Commission; and
``(2) in the case of disbursements allocated to non-Federal
accounts, may be paid only from a qualified non-Federal
account.
``(b) Costs to Be Allocated and Allocation Rules.--
``(1) In general.--Disbursements by any separate segregated
fund or nonconnected committee, other than an organization
described in section 323(b)(1), for any of the following
categories of activity shall be allocated as follows:
``(A) 100 percent of the expenses for public
communications or voter drive activities that refer to
one or more clearly identified Federal candidates, but
do not refer to any clearly identified non-Federal
candidates, shall be paid with funds from a Federal
account, without regard to whether the communication
refers to a political party.
``(B) At least 50 percent, or a greater percentage if
the Commission so determines by regulation, of the
expenses for public communications and voter drive
activities that refer to one or more clearly identified
candidates for Federal office and one or more clearly
identified non-Federal candidates shall be paid with
funds from a Federal account, without regard to whether
the communication refers to a political party.
``(C) At least 50 percent, or a greater percentage if
the Commission so determines by regulation, of the
expenses for public communications or voter drive
activities that refer to a political party, but do not
refer to any clearly identified Federal or non-Federal
candidate, shall be paid with funds from a Federal
account, except that this paragraph shall not apply to
communications or activities that relate exclusively to
elections where no candidate for Federal office appears
on the ballot.
``(D) At least 50 percent, or a greater percentage if
the Commission so determines by regulation, of the
expenses for public communications or voter drive
activities that refer to a political party and refer to
one or more clearly identified non-Federal candidates,
but do not refer to any clearly identified Federal
candidates, shall be paid with funds from a Federal
account, except that this paragraph shall not apply to
communications or activities that relate exclusively to
elections where no candidate for Federal office appears
on the ballot.
``(E) Unless otherwise determined by the Commission
in its regulations, at least 50 percent of any
administrative expenses, including rent, utilities,
office supplies, and salaries not attributable to a
clearly identified candidate, shall be paid with funds
from a Federal account, except that for a separate
segregated fund such expenses may be paid instead by
its connected organization.
``(F) At least 50 percent, or a greater percentage if
the Commission so determines by regulation, of the
direct costs of a fundraising program or event,
including disbursements for solicitation of funds and
for planning and administration of actual fundraising
events, where Federal and non-Federal funds are
collected through such program or event shall be paid
with funds from a Federal account, except that for a
separate segregated fund such costs may be paid instead
by its connected organization. This paragraph shall not
apply to any fundraising solicitations or any other
activity that constitutes a public communication.
``(2) Certain references to federal candidates not taken into
account.--For purposes of paragraph (1), a public communication
or voter drive activity shall not be treated as referring to a
clearly identified Federal candidate if the only reference to
the candidate in the communication or activity is--
``(A) a reference in connection with an election for
a non-Federal office in which such Federal candidate is
also a candidate for such non-Federal office; or
``(B) a reference to the fact that the candidate has
endorsed a non-Federal candidate or has taken a
position on an applicable State or local issue (as
defined in section 301(27)(G)), including a reference
that constitutes the endorsement or position itself.
``(3) Certain references to political parties not taken into
account.--For purposes of paragraph (1), a public communication
or voter drive activity shall not be treated as referring to a
political party if the only reference to the party in the
communication or activity is--
``(A) a reference for the purpose of identifying a
non-Federal candidate;
``(B) a reference for the purpose of identifying the
entity making the public communication or carrying out
the voter drive activity; or
``(C) a reference in a manner or context that does
not reflect support for or opposition to a Federal
candidate or candidates and does reflect support for or
opposition to a State or local candidate or candidates
or an applicable State or local issue.
``(c) Qualified Non-Federal Account.--
``(1) In general.--For purposes of this section, the term
`qualified non-Federal account' means an account which consists
solely of amounts--
``(A) that, subject to the limitations of paragraphs
(2) and (3), are raised by the separate segregated fund
or nonconnected committee only from individuals, and
``(B) with respect to which all requirements of
Federal, State, or local law (including any law
relating to contribution limits) are met.
``(2) Limitation on individual donations.--
``(A) In general.--A separate segregated fund or
nonconnected committee may not accept more than $25,000
in funds for its qualified non-Federal account from any
one individual in any calendar year.
``(B) Affiliation.--For purposes of this paragraph,
all qualified non-Federal accounts of separate
segregated funds or nonconnected committees which are
directly or indirectly established, financed,
maintained, or controlled by the same person or persons
shall be treated as one account.
``(3) Fundraising limitation.--
``(A) In general.--No donation to a qualified non-
Federal account may be solicited, received, directed,
transferred, or spent by or in the name of any person
described in subsection (a) or (e) of section 323.
``(B) Funds not treated as subject to act.--Except as
provided in subsection (a)(2) and this subsection, any
funds raised for a qualified non-Federal account in
accordance with the requirements of this section shall
not be considered funds subject to the limitations,
prohibitions, and reporting requirements of this Act
for any purpose (including for purposes of subsection
(a) or (e) of section 323 or subsection (d)(1) of this
section).
``(d) Definitions.--
``(1) Federal account.--The term `Federal account' means an
account which consists solely of contributions subject to the
limitations, prohibitions, and reporting requirements of this
Act. Nothing in this section or in section 323(b)(2)(B)(iii)
shall be construed to infer that a limit other than the limit
under section 315(a)(1)(C) applies to contributions to the
account.
``(2) Nonconnected committee.--The term `nonconnected
committee' shall not include a political committee of a
political party.
``(3) Voter drive activity.--The term `voter drive activity'
has the meaning given such term in section 301(28).''.
(b) Reporting Requirements.--Section 304(e) of the Federal Election
Campaign Act of 1971 (2 U.S.C. 434(e)) is amended--
(1) by redesignating paragraphs (3) and (4) as paragraphs (4)
and (5); and
(2) by inserting after paragraph (2) the following new
paragraph:
``(3) Receipts and disbursements from qualified non-federal
accounts.--In addition to any other reporting requirement
applicable under this Act, a political committee to which
section 325(a) applies shall report all receipts and
disbursements from a qualified non-Federal account (as defined
in section 325(c)).''.
(c) Regulations.--The Federal Election Commission shall promulgate
regulations to implement the amendments made by this section not later
than 180 days after the date of enactment of this Act.
(d) Effective Date.--The amendments made by this section shall take
effect on the date which is 180 days after the date of enactment of
this Act.

SEC. 4. CONSTRUCTION.

No provision of this Act, or amendment made by this Act, shall be
construed--
(1) as approving, ratifying, or endorsing a regulation
promulgated by the Federal Election Commission;
(2) as establishing, modifying, or otherwise affecting the
definition of political organization for purposes of the
Internal Revenue Code of 1986; or
(3) as affecting the determination of whether a group
organized under section 501(c) of the Internal Revenue Code of
1986 is a political committee under section 301(4) of the
Federal Election Campaign Act of 1971.

SEC. 5. JUDICIAL REVIEW.

(a) Special Rules for Actions Brought on Constitutional Grounds.--If
any action is brought for declaratory or injunctive relief to challenge
the constitutionality of any provision of this Act or any amendment
made by this Act, the following rules shall apply:
(1) The action shall be filed in the United States District
Court for the District of Columbia and shall be heard by a 3-
judge court convened pursuant to section 2284 of title 28,
United States Code.
(2) A copy of the complaint shall be delivered promptly to
the Clerk of the House of Representatives and the Secretary of
the Senate.
(3) A final decision in the action shall be reviewable only
by appeal directly to the Supreme Court of the United States.
Such appeal shall be taken by the filing of a notice of appeal
within 10 days, and the filing of a jurisdictional statement
within 30 days, of the entry of the final decision.
(4) It shall be the duty of the United States District Court
for the District of Columbia and the Supreme Court of the
United States to advance on the docket and to expedite to the
greatest possible extent the disposition of the action and
appeal.
(b) Intervention by Members of Congress.--In any action in which the
constitutionality of any provision of this Act or any amendment made by
this Act is raised (including but not limited to an action described in
subsection (a)), any Member of the House of Representatives (including
a Delegate or Resident Commissioner to Congress) or Senate shall have
the right to intervene either in support of or opposition to the
position of a party to the case regarding the constitutionality of the
provision or amendment. To avoid duplication of efforts and reduce the
burdens placed on the parties to the action, the court in any such
action may make such orders as it considers necessary, including orders
to require intervenors taking similar positions to file joint papers or
to be represented by a single attorney at oral argument.
(c) Challenge by Members of Congress.--Any Member of Congress may
bring an action, subject to the special rules described in subsection
(a), for declaratory or injunctive relief to challenge the
constitutionality of any provision of this Act or any amendment made by
this Act.
(d) Applicability.--
(1) Initial claims.--With respect to any action initially
filed on or before December 31, 2008, the provisions of
subsection (a) shall apply with respect to each action
described in such subsection.
(2) Subsequent actions.--With respect to any action initially
filed after December 31, 2008, the provisions of subsection (a)
shall not apply to any action described in such subsection
unless the person filing such action elects such provisions to
apply to the action.

H.R. 513, the ``527 Reform Act of 2005'' (``the Act''), was
introduced on February 2, 2005 and referred to the Committee on
House Administration. H.R. 513 amends the Federal Election
Campaign Act (``FECA'') of 1971 to clarify when organizations
described in section 527 of the Internal Revenue Code of 1986
must register as political committees. The committee, having
considered the Act, voted to report it without recommendation
5-3.

Purpose of the Legislation

The stated purpose of the Bipartisan Campaign Reform Act of
2002 (``BCRA'') was to ``sever the link'' between federal
office holders and large ``soft money'' donors. The minority
members of the committee, all of whom voted for BCRA, assert
that it has accomplished this goal. The current state of
federal campaigns and election activities, however, belie this
assertion. Although BCRA prohibits federal officeholders and
candidates from directly soliciting soft money, the link
between soft money organizations established under section 527
of the Internal Revenue Code (``527s'') and federal
officeholders, candidates, and top party officials has clearly
not been severed.\1\ In fact, the record set forth below
demonstrates that ``independent'' 527 groups are often
intertwined with federal office holders and national parties,
and that soft money continues to play a role in federal
elections. H.R. 513 seeks to remedy this situation by adding
527 groups to the definition of ``political committee'' under
FECA, thus subjecting them to the full panoply of federal
election law regulations.
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\1\ The fundraising restrictions in BCRA, of course, extend not
only to federal officeholders themselves, but also to their agents and
to the national party committees.
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After the passage of BCRA, many groups began to organize
under section 527 to avoid the restrictions it imposed. Some
groups organized to benefit Republicans, some to benefit
Democrats. Though ostensibly ``independent'', there were
numerous connections between top party officials and major 527
groups during the 2004 election cycle. In some cases, there was
steady movement of individuals between political campaigns and
527 organizations. A case in point is MoveOn.org. Although
MoveOn.org describes itself as an ``independent'' organization,
a closer review reveals its close ties to the official party
structure.
MoveOn.org is organized into three separate organizations:
MoveOn.org Civic Action, a 501(c)(4) organization that focuses
on issue advocacy; MoveOn.org Political Action \2\, a political
action committee registered with the FEC that works directly to
elect ``progressive'' candidates; and MoveOn.org Voter Fund, an
organization constituted under section 527 of the tax code. It
is this final organization, MoveOn.org Voter Fund, that, as a
527 organization, can accept unlimited contributions from
individual donors. During the 2004 election cycle alone,
MoveOn.org Voter Fund raised over $12 million in such funds,
the majority of which came from three individual donors who
gave at least $2.5 million each: George Soros, Peter Lewis, and
Herbert Sandler.\3\ These multi-million dollar soft money
contributions made by wealthy individuals are not subject to
the type of limits BCRA imposes on other political committees.
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\2\ MoveOn.org Political Action was formerly known as MoveOn PAC.
As a political action committee registered with the FEC, contributions
to MoveOn.org Political Action must conform to FEC rules regulating
political committees.
\3\ MoveOn.org Voter Fund: Liberal Advocacy Group, The Center for
Public Integrity, available at http://www.publicintegrity.org/527/
search.aspx?act=com&orgid=682 (Jan. 31, 2005). This summary will be
included in the appendix to this report.
---------------------------------------------------------------------------
While circumventing BCRA's regulatory scheme, officials at
MoveOn interacted with officeholders and federal campaign
officials. For example, during the 2004 presidential campaign,
top officials for MoveOn worked simultaneously for the John
Kerry presidential campaign.\4\ This interaction between MoveOn
and Democratic lawmakers did not end with the conclusion of the
presidential campaign. Instead, it has grown considerably.
Members of Congress are now openly working with MoveOn.org. The
House Minority Leader or her staff has ``calls and meetings `on
a weekly basis' with representatives of MoveOn.'' \5\ Many
prominent members of Congress have spoken at MoveOn rallies.\6\
MoveOn's Executive Director was recently invited by Senate
Democrats to address them at a retreat.\7\ He described
MoveOn's role in working with elected leaders: ``We're acting
as kind of an external whip, making sure there are rewards for
people who are helping move the message and penalties when
people go off message.'' \8\ MoveOn's interaction with
Democratic party officials also continues. The Democratic
National Committee has praised MoveOn for its efforts, stating
that ``[o]bviously they [MoveOn] are relaying the Democratic
Party message.'' \9\
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\4\ For example, Zach Exley transitioned from being the Director of
Special Projects for MoveOn.org to become the Director of Online
Communications and Organization for John Kerry's presidential campaign.
Exley also helped Howard Dean set up his web-based organization during
the Democratic presidential primary. Campaigns, National Journal, Apr.
8, 2004. The entire article will be included in the appendix to this
report. Tom Matzzie helped run Kerry's Internet campaign and now works
as MoveOn.org's Washington Director. Ronald Brownstein, The Internet
and Democrats, The National Journal, Vol. 37, No. 27, July 2, 2005. The
entire article will be included in the appendix to this report.
\5\ According to Rep. Nancy Pelosi's spokeswoman Jennifer Crider.
Chris Cillizza, MoveOn Goes Mainstream, Roll Call, Apr. 13, 2005. The
entire article will be included in the appendix to this report.
\6\ Id.
\7\ Ronald Brownstein, The Internet and Democrats, The National
Journal, Vol. 37, No. 27, July 2, 2005. Brownstein, supra note 4.
\8\ Adam Smith, Unshaven, Unbowed and in Our Face, St. Petersburg
Times, Feb. 18, 2005. The entire article will be included in the
appendix to this report.
\9\ Cillizza, supra note 5.
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Interaction with lawmakers and party officials is only one
aspect of MoveOn's influence on federal election activity.
MoveOn.org has also participated in massive fundraising and
campaign efforts to support or oppose elected officials. The
group has organized several fundraising campaigns to benefit
federal officeholders,\10\ as well as become involved in the
Vermont Senate race nominee selection.\11\ MoveOn admits it
plans on ``rewarding'' politicians who ``say and do the right
thing'' with fundraising efforts.\12\ To that end, MoveOn's
website is accepting donations for several ``hot'' 2006
Congressional races against high-profile members of
Congress.\13\ MoveOn's fundraising efforts are obviously
appreciated by lawmakers. The Senate Assistant Minority Leader
has said that MoveOn is ``one of our most important''
fundraising avenues.\14\
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\10\ For example, through MoveOn.org, a U.S. Senator was able to
raise $823,000 in 72 hours for a colleague. MoveOn Goes Mainstream,
Roll Call, Apr. 13, 2005. The entire article will be included in the
appendix to this report.
\11\ In April 2005, MoveOn asked Vermont voters if they would
support Rep. Bernie Sanders, an independent, if he ran for the Senate.
Rep. Sanders' candidacy is strongly supported by Democratic leaders.
MoveOn Wants Sanders to Move Up to Senate, Roll Call, Apr. 27, 2005.
The entire article will be included in the appendix to this report.
\12\ Brownstein, supra note 7.
\13\ MoveOn.org's website is currently soliciting contributions for
Bill Nelson, Bob Casey, and Nick Lampson, who are all candidates for
federal office. At https://www.moveonpac.org/give/05.html.
\14\ Quoting Sen. Richard Durbin. Chris Cillizza and Paul Kane, GOP
Sees MoveOn as Wedge, Roll Call, July 11, 2005. The entire article will
be included in the appendix to this report.
---------------------------------------------------------------------------
Further evidence of MoveOn's influence on federal election
activity is the statements of its own members. Officials in the
organization have claimed to control the Democratic Party. An
e-mail sent out earlier this year to MoveOn supporters
announced that the Democratic Party is now ``[O]ur party: We
bought it, we own it and we're going to take it back.'' \15\
MoveOn's potential influence on the 2006 Florida governor's
race has been touted by MoveOn representatives, ``MoveOn will
be able to ask our members to contribute to the Florida
governor's race faster than any organization in the United
States; literally millions of dollars can come into the Florida
governor's race overnight.'' \16\
---------------------------------------------------------------------------
\15\ Smith, supra note 8.
\16\ According to Tom Matzzie, MoveOn.org's Washington Director.
Id.
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Unfortunately, the connection between 527 organizations and
federal candidates does not end with MoveOn. During the mark-up
of this legislation, the majority members of this committee
presented evidence showing that other individuals have played
dual roles, that is, participating in 527 organizations
unconstrained by BCRA's contribution limitations while also
working in federal campaigns or for a national party
committee.\17\ Reference to these individuals and organizations
is not meant to suggest that they have been engaged in illegal
coordination in violation of BCRA. Indeed, if BCRA had
prohibited these activities, no change to the law would be
necessary. It is precisely because the existing law allows for
and cannot prevent this sort of shell game that the majority
believes changes are necessary. The current law allows for
ostensibly ``independent'' groups that only employ individuals
and support candidates of one political party, and exist to
support the agenda and candidates of that same political party,
to evade the limits BCRA imposes on other organizations that
are similarly engaged in federal election activities.
---------------------------------------------------------------------------
\17\ Jim Drinkard, Outside' Political Groups Full Of Party
Insiders, USA Today, June, 28, 2004; Lisa Getter, Kerry Aided By
`Illegal' Soft Money, GOP Claims, Los Angeles Times, Apr. 1, 2004.
Articles will be included in the appendix to this report.
---------------------------------------------------------------------------
Had the campaigns these organizations were supporting been
successful, individuals directly linked to soft money
organizations would have been rewarded with official positions.
This clearly would frustrate the purpose of BCRA, which deemed
such links between soft money and federal election activities
inherently corrupt and meant to sever them. By treating 527
organizations like other political committees, H.R. 513 will
force these organizations to comply with the source limits,
prohibitions and disclosure requirements of BCRA.
Clearly, BCRA has failed to get soft money out of politics,
and has succeeded only in diverting it to other groups.
Recognizing this failure, the majority of the committee
believes the law needs to be changed. It previously reported
H.R. 1316, not to expand the scope of BCRA, but instead to
relieve the party committees of some of the regulatory
constraints that hinder their ability to compete with groups
operating outside the law.
It reports H.R. 513 so that the full House may have the
opportunity to consider alternative solutions to the obvious
problems in our current system.

Summary of the Legislation

Section 1.-Short Title: The ``527 Reform Act of 2005''

Section 2.-Treatment of Section 527 Organizations

Requires an organization described in Section 527
of the Internal Revenue Code of 1986 (``IRC'') to register and
report with the Federal Election Commission (``FEC'') as a
political committee, unless the organization:
Has annual gross receipts of less than $25,000;
Is a political committee of a state and/or local
party or candidate;
Exists solely to pay certain administrative expenses
of a qualified newsletter;
Is composed exclusively of state and/or local elected
officials and does not reference federal candidates in
its voter drive activities; or
Is exclusively devoted to elections where no federal
candidate is on the ballot, to ballot initiatives and
referenda, or to the appointment, nomination, or
confirmation of individuals to non-elected offices.
The exceptions (listed above) will not apply if
such organization:
Transmits a public communication that promotes,
supports, attacks, or opposes a federal candidate in
the year prior to a federal election;
Conducts voter drive activities in more than one
state;
Refers to a federal candidate in its voter drive
activities,
Is controlled by a federal candidate or a national
political party; or
Makes contributions to federal candidates.
Makes the amendments made by this section
effective 60 days after their enactment.

Section 3.--Rules for Allocation of Expenses Between Federal and Non-
Federal Activities

Establishes the following allocation rules:
100 percent of expenses for public communications or
voter drive activities that refer to a federal
candidate but do not refer to a non-federal candidate
must be paid for with hard money;
At least 50 percent, or a greater percentage if the
FEC so determines by regulation, of expenses for public
communications or voter drive activities that refer to
a federal candidate and to a state candidate must be
paid for with hard money;
At least 50 percent, or a greater percentage if the
FEC so determines by regulation, of expenses for public
communications or voter drive activities that refer to
a political party but not to a federal candidate must
be paid for with hard money;
At least 50 percent, or a greater percentage if the
FEC so determines by regulation, of expenses for public
communications or voter drive activities that refer to
a political party and to a non-federal candidate but
not to a federal candidate must be paid for with hard
money;
At least 50 percent, or a greater percentage if the
FEC so determines by regulation, of administrative
overhead expenses must be paid for with hard money; and
At least 50 percent, or a greater percentage if the
FEC so determines by regulation, of direct costs of
fundraising program that collects both federal and non-
federal funds must be paid for with hard money.

Permits ``qualified'' non-federal accounts to
allocate spending with federal accounts, provided the following
requirements are observed:
Such qualified non-federal accounts may not accept
more than $25,000 from any one individual during a
calendar year; and
National political parties and federal candidates are
prohibited from soliciting funds for non-federal
accounts.
Exempts funds raised for a qualified non-federal
account from the limitations, prohibitions, and reporting
requirements of the Federal Election Campaign Act (``FECA'').
Requires the reporting of all receipts and
disbursements from a qualified non-federal account.
Requires the FEC to promulgate implementing
regulations.

Section 4.--Construction

States that the bill shall not be construed as (i)
approving, ratifying, or endorsing a regulation promulgated by
the FEC, (ii) affecting the definition of political
organizations in the IRC, or (iii) affecting whether a 501(c)
organization under the IRC is a political committee under the
FECA.

Section 5.--Judicial Review

Establishes a special procedure governing any
constitutional challenges to H.R. 513, which is as follows:
The action shall be filed in the United States
District Court for the District of Columbia and shall
be heard by a 3-judge panel; and
Any appeal shall be reviewed only by the United
States Supreme Court.
Allows Members of Congress to intervene in any
action brought against H.R. 513.
Allows Members of Congress to bring an action
challenging the constitutionality of H.R. 513.
Limits the special procedure governing
constitutional challenges to action filed on or before December
31, 2008.

Committee Consideration of the Legislation

INTRODUCTION AND REFERRAL

On February 2, 2005, Mr. Shays and Mr. Meehan introduced
H.R. 513, the ``527 Reform Act of 2005,'' which was referred to
the Committee on House Administration.

HEARINGS

The Committee on House Administration held a hearing on
H.R. 513 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 29, 2005, the Committee met to mark up H.R. 513.
The Committee reported H.R. 513 without recommendation by a
record vote (5-3), 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 sets forth requirements for when
organizations described in Section 527 of the Internal Revenue
Code of 1986 must register as political committees, and for
other purposes.
The vote on the amendment was 5-3 and the amendment was
agreed to.

------------------------------------------------------------------------
Member Yes No Present
------------------------------------------------------------------------
Mr. Ney................................ X - -
Mr. Ehlers............................. X - -
Mr. Mica............................... - - -
Mr. Doolittle.......................... X - -
Mr. Reynolds........................... X - -
Ms. Miller............................. X - -
Ms. Millender-McDonald................. - X -
Mr. Brady.............................. - X -
Ms. Lofgren............................ - X -
--------------------------------
Total............................ 5 3 -
------------------------------------------------------------------------

The Committee then voted on H.R. 513, as amended. The vote
on the bill was 5-3 and the bill was agreed to.

The Committee then voted to favorably report H.R. 513, as
amended. The vote to report favorably was approved by a
recorded vote (5-3).

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:

H.R. 513-527 Reform Act of 2005

Summary: H.R. 513 would amend the Federal Election Campaign
Act of 1971. The legislation would require certain political
organizations, as defined by section 527 of the tax code,
involved in federal election activities to register with the
Federal Election Commission (FEC).
CBO estimates that implementing H.R. 513 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. 513 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA). The bill would
specifically exclude state and local elections; therefore, it
would impose no costs on state, local, or tribal governments.
H.R. 513 would impose private-sector mandates, as defined
in UMRA, on certain political organizations. CBO estimates that
the direct cost of the mandate would be minimal and fall well
below the annual threshold established in UMRA ($123 million in
2005, adjusted annually for inflation).
Estimated Cost to the Federal Government: The estimated
budgetary impact of H.R. 513 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 a

Estimated Authorization Level................................. 1 * * * *
Estimated Outlays............................................. 1 * * * *
----------------------------------------------------------------------------------------------------------------
a 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. 513 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. 513 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. 513 contains no intergovernmental mandates as defined in
the Unfunded Mandates Reform Act. The bill would specifically
exclude state and local elections; therefore, it would impose
no costs on state, local, or tribal governments.
Estimated impact on the private sector: H.R. 513 would
impose private-sector mandates, as defined in UMRA, on certain
political organizations. CBO estimates that the direct cost of
the mandate would be minimal and fall well below the annual
threshold established in UMRA ($123 million in 2005, adjusted
annually for inflation).
The bill would change the definition of a political
committee to include certain 527 organizations, as defined by
section 527 of the Internal Revenue Code. Those 527
organizations would be required to register as political
committees with the FEC and comply with current regulations on
federal campaign finance including certain limits on
contributions and reporting and disclosure requirements. Based
on information from the FEC, CBO estimates that the direct
costs associated with those requirements would be minimal.
Previous CBO Estimate: On July 6, 2005, CBO transmitted a
cost estimate for S. 1053, the 527 Reform Act of 2005, as
ordered reported by the Senate Committee on Rules and
Administration on April 27, 2005. On June 17, 2005, CBO
transmitted a cost estimate for H.R. 1316, the 527 Fairness Act
of 2005, as ordered reported by the House Committee on House
Administration on June 8, 2005. The three pieces of legislation
are similar and would all amend the Federal Election Campaign
Act of 1971. The estimated federal costs are identical. In
addition, all of the bills would impose private-sector mandates
on certain political organizations with minimal direct cost. S.
1053 would require the television broadcast industry to charge
the lowest unit rate to federal candidates and to the national
committee of a political party with rates based on comparison
to the preceding year. H.R. 513 and H.R. 1316 do not contain
any mandates on the television broadcast industry.
Estimate prepared by: Federal costs: Matthew Pickford;
Impact on State, local, and tribal governments: Sarah Puro;
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) * * *

* * * * * * *

(C) any local committee of a political party which
receives contributions aggregating in excess of $5,000
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 during a calendar year, or makes
contributions aggregating in excess of $1,000 during a
calendar year or makes expenditures aggregating in
excess of $1,000 during a calendar year[.]; or
(D) any applicable 527 organization.

* * * * * * *

(27) Applicable 527 organization.--
(A) In general.--For purposes of paragraph (4)(D),
the term ``applicable 527 organization'' means a
committee, club, association, or group of persons
that--
(i) has given notice to the Secretary of the
Treasury under section 527(i) of the Internal
Revenue Code of 1986 that it is to be treated
as an organization described in section 527 of
such Code; and
(ii) is not described in subparagraph (B).
(B) Excepted organizations.--A committee, club,
association, or other group of persons described in
this subparagraph is--
(i) an organization described in section
527(i)(5) of the Internal Revenue Code of 1986;
(ii) an organization which is a committee,
club, association or other group of persons
that is organized, operated, and makes
disbursements exclusively for paying expenses
described in the last sentence of section
527(e)(2) of the Internal Revenue Code of 1986
or expenses of a newsletter fund described in
section 527(g) of such Code;
(iii) an organization which is a committee,
club, association, or other group that consists
solely of candidates for State or local office,
individuals holding State or local office, or
any combination of either, but only if the
organization refers only to one or more non-
Federal candidates or applicable State or local
issues in all of its voter drive activities and
does not refer to a Federal candidate or a
political party in any of its voter drive
activities; or
(iv) an organization described in
subparagraph (C).
(C) Applicable organization.--For purposes of
subparagraph (B)(iv), an organization described in this
subparagraph is a committee, club, association, or
other group of persons whose election or nomination
activities relate exclusively to--
(i) elections where no candidate for Federal
office appears on the ballot; or
(ii) one or more of the following purposes:
(I) Influencing the selection,
nomination, election, or appointment of
one or more candidates to non-Federal
offices.
(II) Influencing one or more
applicable State or local issues.
(III) Influencing the selection,
appointment, nomination, or
confirmation of one or more individuals
to non-elected offices.
(D) Exclusivity test.--A committee, club,
association, or other group of persons shall not be
treated as meeting the exclusivity requirement of
subparagraph (C) if it makes disbursements aggregating
more than $1,000 for any of the following:
(i) A public communication that promotes,
supports, attacks, or opposes a clearly
identified candidate for Federal office during
the 1-year period ending on the date of the
general election for the office sought by the
clearly identified candidate (or, if a runoff
election is held with respect to such general
election, on the date of the runoff election).
(ii) Any voter drive activity during a
calendar year, except that no disbursements for
any voter drive activity shall be taken into
account under this subparagraph if the
committee, club, association, or other group of
persons during such calendar year--
(I) makes disbursements for voter
drive activities with respect to
elections in only 1 State and complies
with all applicable election laws of
that State, including laws related to
registration and reporting requirements
and contribution limitations;
(II) refers to one or more non-
Federal candidates or applicable State
or local issues in all of its voter
drive activities and does not refer to
any Federal candidate or any political
party in any of its voter drive
activities;
(III) does not have a candidate for
Federal office, an individual who holds
any Federal office, a national
political party, or an agent of any of
the foregoing, control or materially
participate in the direction of the
organization, solicit contributions to
the organization (other than funds
which are described under clauses (i)
and (ii) of section 323(e)(1)(B)), or
direct disbursements, in whole or in
part, by the organization; and
(IV) makes no contributions to
Federal candidates.
(E) Certain references to federal candidates not
taken into account.--For purposes of subparagraphs
(B)(iii) and (D)(ii)(II), a voter drive activity shall
not be treated as referring to a clearly identified
Federal candidate if the only reference to the
candidate in the activity is--
(i) a reference in connection with an
election for a non-Federal office in which such
Federal candidate is also a candidate for such
non-Federal office; or
(ii) a reference to the fact that the
candidate has endorsed a non-Federal candidate
or has taken a position on an applicable State
or local issue, including a reference that
constitutes the endorsement or position itself.
(F) Certain references to political parties not taken
into account.--For purposes of subparagraphs (B)(iii)
and (D)(ii)(II), a voter drive activity shall not be
treated as referring to a political party if the only
reference to the party in the activity is--
(i) a reference for the purpose of
identifying a non-Federal candidate;
(ii) a reference for the purpose of
identifying the entity making the public
communication or carrying out the voter drive
activity; or
(iii) a reference in a manner or context that
does not reflect support for or opposition to a
Federal candidate or candidates and does
reflect support for or opposition to a State or
local candidate or candidates or an applicable
State or local issue.
(G) Applicable state or local issue.--For purposes of
this paragraph, the term ``applicable State or local
issue'' means any State or local ballot initiative,
State or local referendum, State or local
constitutional amendment, State or local bond issue, or
other State or local ballot issue.
(28) Voter drive activity.--The term ``voter drive activity''
means any of the following activities 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):
(A) Voter registration activity.
(B) Voter identification.
(C) Get-out-the-vote activity.
(D) Generic campaign activity.
(E) Any public communication related to activities
described in subparagraphs (A) through (D).
Such term shall not include any activity described in
subparagraph (A) or (B) of section 316(b)(2).

* * * * * * *

REPORTS

Sec. 304. (a) * * *

* * * * * * *

(e) Political Committees.--
(1) * * *

* * * * * * *

(3) Receipts and disbursements from qualified non-
federal accounts.--In addition to any other reporting
requirement applicable under this Act, a political
committee to which section 325(a) applies shall report
all receipts and disbursements from a qualified non-
Federal account (as defined in section 325(c)).
[(3)] (4) Itemization.--If a political committee has
receipts or disbursements to which this subsection
applies from or to any person aggregating in excess of
$200 for any calendar year, the political committee
shall separately itemize its reporting for such person
in the same manner as required in paragraphs (3)(A),
(5), and (6) of subsection (b).
[(4)] (5) Reporting periods.--Reports required to be
filed under this subsection shall be filed for the same
time periods required for political committees under
subsection (a)(4)(B).

* * * * * * *

SEC. 325. ALLOCATION AND FUNDING RULES FOR CERTAIN EXPENSES RELATING TO
FEDERAL AND NON-FEDERAL ACTIVITIES.

(a) In General.--In the case of any disbursements by any
political committee that is a separate segregated fund or
nonconnected committee for which allocation rules are provided
under subsection (b)--
(1) the disbursements shall be allocated between
Federal and non-Federal accounts in accordance with
this section and regulations prescribed by the
Commission; and
(2) in the case of disbursements allocated to non-
Federal accounts, may be paid only from a qualified
non-Federal account.
(b) Costs to Be Allocated and Allocation Rules.--
(1) In general.--Disbursements by any separate
segregated fund or nonconnected committee, other than
an organization described in section 323(b)(1), for any
of the following categories of activity shall be
allocated as follows:
(A) 100 percent of the expenses for public
communications or voter drive activities that
refer to one or more clearly identified Federal
candidates, but do not refer to any clearly
identified non-Federal candidates, shall be
paid with funds from a Federal account, without
regard to whether the communication refers to a
political party.
(B) At least 50 percent, or a greater
percentage if the Commission so determines by
regulation, of the expenses for public
communications and voter drive activities that
refer to one or more clearly identified
candidates for Federal office and one or more
clearly identified non-Federal candidates shall
be paid with funds from a Federal account,
without regard to whether the communication
refers to a political party.
(C) At least 50 percent, or a greater
percentage if the Commission so determines by
regulation, of the expenses for public
communications or voter drive activities that
refer to a political party, but do not refer to
any clearly identified Federal or non-Federal
candidate, shall be paid with funds from a
Federal account, except that this paragraph
shall not apply to communications or activities
that relate exclusively to elections where no
candidate for Federal office appears on the
ballot.
(D) At least 50 percent, or a greater
percentage if the Commission so determines by
regulation, of the expenses for public
communications or voter drive activities that
refer to a political party and refer to one or
more clearly identified non-Federal candidates,
but do not refer to any clearly identified
Federal candidates, shall be paid with funds
from a Federal account, except that this
paragraph shall not apply to communications or
activities that relate exclusively to elections
where no candidate for Federal office appears
on the ballot.
(E) Unless otherwise determined by the
Commission in its regulations, at least 50
percent of any administrative expenses,
including rent, utilities, office supplies, and
salaries not attributable to a clearly
identified candidate, shall be paid with funds
from a Federal account, except that for a
separate segregated fund such expenses may be
paid instead by its connected organization.
(F) At least 50 percent, or a greater
percentage if the Commission so determines by
regulation, of the direct costs of a
fundraising program or event, including
disbursements for solicitation of funds and for
planning and administration of actual
fundraising events, where Federal and non-
Federal funds are collected through such
program or event shall be paid with funds from
a Federal account, except that for a separate
segregated fund such costs may be paid instead
by its connected organization. This paragraph
shall not apply to any fundraising
solicitations or any other activity that
constitutes a public communication.
(2) Certain references to federal candidates not
taken into account.--For purposes of paragraph (1), a
public communication or voter drive activity shall not
be treated as referring to a clearly identified Federal
candidate if the only reference to the candidate in the
communication or activity is--
(A) a reference in connection with an
election for a non-Federal office in which such
Federal candidate is also a candidate for such
non-Federal office; or
(B) a reference to the fact that the
candidate has endorsed a non-Federal candidate
or has taken a position on an applicable State
or local issue (as defined in section
301(27)(G)), including a reference that
constitutes the endorsement or position itself.
(3) Certain references to political parties not taken
into account.--For purposes of paragraph (1), a public
communication or voter drive activity shall not be
treated as referring to a political party if the only
reference to the party in the communication or activity
is--
(A) a reference for the purpose of
identifying a non-Federal candidate;
(B) a reference for the purpose of
identifying the entity making the public
communication or carrying out the voter drive
activity; or
(C) a reference in a manner or context that
does not reflect support for or opposition to a
Federal candidate or candidates and does
reflect support for or opposition to a State or
local candidate or candidates or an applicable
State or local issue.
(c) Qualified Non-Federal Account.--
(1) In general.--For purposes of this section, the
term ``qualified non-Federal account'' means an account
which consists solely of amounts--
(A) that, subject to the limitations of
paragraphs (2) and (3), are raised by the
separate segregated fund or nonconnected
committee only from individuals, and
(B) with respect to which all requirements of
Federal, State, or local law (including any law
relating to contribution limits) are met.
(2) Limitation on individual donations.--
(A) In general.--A separate segregated fund
or nonconnected committee may not accept more
than $25,000 in funds for its qualified non-
Federal account from any one individual in any
calendar year.
(B) Affiliation.--For purposes of this
paragraph, all qualified non-Federal accounts
of separate segregated funds or nonconnected
committees which are directly or indirectly
established, financed, maintained, or
controlled by the same person or persons shall
be treated as one account.
(3) Fundraising limitation.--
(A) In general.--No donation to a qualified
non-Federal account may be solicited, received,
directed, transferred, or spent by or in the
name of any person described in subsection (a)
or (e) of section 323.
(B) Funds not treated as subject to act.--
Except as provided in subsection (a)(2) and
this subsection, any funds raised for a
qualified non-Federal account in accordance
with the requirements of this section shall not
be considered funds subject to the limitations,
prohibitions, and reporting requirements of
this Act for any purpose (including for
purposes of subsection (a) or (e) of section
323 or subsection (d)(1) of this section).
(d) Definitions.--
(1) Federal account.--The term ``Federal account''
means an account which consists solely of contributions
subject to the limitations, prohibitions, and reporting
requirements of this Act. Nothing in this section or in
section 323(b)(2)(B)(iii) shall be construed to infer
that a limit other than the limit under section
315(a)(1)(C) applies to contributions to the account.
(2) Nonconnected committee.--The term ``nonconnected
committee'' shall not include a political committee of
a political party.
(3) Voter drive activity.--The term ``voter drive
activity'' has the meaning given such term in section
301(28).

* * * * * * *

APPENDIX B

----------

[From the National Journal's Technology Daily; Apr. 8, 2004]

Campaigns

John Kerry's presidential campaign has hired Zach Exley,
MoveOn.org's director of special projects, to become the
campaign's new director of online communications and
organizing. The move prompted an angry response from the
Republican National Committee (RNC), which again raised the
question of whether the Kerry campaign was coordinating its
activities with advocacy groups, illegal under current campaign
finance laws. The RNC issued an alert calling Exley a
``negative campaigner,'' noting that during the 2000 campaign
Exley created a satirical anti-Bush Web site. It also mentioned
a Web ad posted on MoveOn.org's Web site comparing President
Bush to Adolf Hitler, and questioned whether Exley would keep
his distance from MoveOn during the campaign. Exley, who worked
as an adviser to Vermont Gov. Howard Dean during the primary
election season, had no comment by press time.

APPENDIX C

----------

[From the National Journal; July 2, 2005]

The Internet and the Democrats

(By Ronald Brownstein)

In retrospect, the day in September 1998 when two wealthy
software developers in Berkeley, Calif., posted an online
petition opposing the impeachment of Bill Clinton may stand as
the day his vision for the Democratic Party began to be
eclipsed.
That petition from Wes Boyd and Joan Blades led to the
formation of MoveOn.org, which has metamorphosed into the
nation's largest and most effective Internet advocacy group.
And MoveOn, an unstintingly liberal voice, has become the
cutting edge of an online revolution that is reshaping the
Democratic Party amid the intense political polarization of
George W. Bush's presidency.
The rise of a mass Democratic Internet fundraising and
activist base--a trend that includes not only the 3.1 million-
member MoveOn, but the political organization founded by Howard
Dean, the Internet contributors to the Democratic National
Committee and the John Kerry presidential campaign, and the
thousands of partisans venting daily on left-leaning Web logs
like Daily Kos and MyDD.com--is beginning to shift the balance
of power in the Democratic Party away from the ``Third Way''
moderation that Clinton and his ``New Democrat'' movement
promoted.
Centrist organizations such as the Democratic Leadership
Council have produced nothing like the massive lists of
activists and donors that liberals have assembled through the
Internet. And that mass liberal base is pushing the party
partly toward more-liberal positions, but even more so toward
greater confrontation with Bush--and increasing pressure on
Democrats who consider cooperating with him in any way.
The Internet base, for the first time, has provided
Democrats with a tool for raising money, recruiting volunteers,
and directing messages to their partisans that is comparable to
the capacity that direct mail and talk radio have long provided
Republicans. But just as those tools have mostly strengthened
the Right in the GOP, the Internet has mostly strengthened the
wing of the Democratic Party that feeds on polarization and
conflict.
Indeed, the Internet is fast becoming the confrontation
caucus in the Democratic Party. Defiance of Bush is almost
instantly rewarded with a torrent of praise on liberal blogs
and often with fundraising or other assistance from the blogs
and groups like MoveOn; the group's PAC, for instance, raised a
breathtaking $800,000 from its members in less than three days
this spring for venerable Sen. Robert Byrd, D-W.Va., a vocal
opponent of Republican threats to block filibusters of judicial
nominations.
Just as surely, almost all gestures toward collaboration
with Bush provoke condemnation and outrage. Most often, the
criticism amounts to angry denunciations on liberal blogs that
can generate e-mails or unfavorable stories in the mainstream
media. Pushing further, liberal bloggers have been openly
trolling for a Democrat to challenge Sen. Joe Lieberman, D-
Conn., in a primary next year on the grounds that he has
supported Bush too often. And MoveOn recently targeted House
Minority Whip Steny Hoyer, D-Md., with negative radio ads
because he voted for the Bush-backed bill making it more
difficult for consumers to declare bankruptcy.
The rapidly growing Democratic Internet activist base ``is
more partisan than ideological,'' says Howard Wolfson, the
former executive director of the Democratic Congressional
Campaign Committee. ``And it stems from a feeling in the
grassroots that Democrats in Washington were not fighting back
hard enough against Bush.''
In effect, the rise of the Internet base is now subjecting
Democrats to a mass experiment in conditioning behavior--a
political equivalent of Pavlov's dogs. ``We are actually
starting to build the kind of noise machine, to reward or beat
up on people, that the Right has had for a long time,'' says
Markos Moulitsas Zuniga, 33, the pugnacious founder of the
popular blog Daily Kos. ``We are training these politicians
that they don't have to be afraid of taking courageous stands--
and that they will be rewarded or punished based on their
behavior.''
In all of these ways, the Internet base is playing the same
role in the Democratic Party that conservative economic and
social groups (like the Club for Growth or Focus on the Family)
play in the GOP. Both are increasing demands for ideological
consistency and partisan loyalty. And both are becoming more
influential as the country grows more deeply polarized over
Bush's aggressively conservative agenda, and over the fervent
Democratic opposition to almost all of it. On each side,
polarization is feeding on itself, as the widening gulf between
the parties strengthens those who argue that compromise on
almost any issue has become impossible.
``The leadership of both sides has a gun to their head from
the activist base,'' said Dan Gerstein, the former
communications director for Lieberman. ``If they don't hold the
line, the trigger is going to be pulled against them.''
The Democratic Internet base cradling that trigger does not
speak with one voice. But the emerging generation of online
Democratic activists, many of them young and shaped by the
bruising partisan conflicts of the past decade, seems united
most by the belief that the quickest way for Democrats to
regain power is to confront Bush more forcefully and to draw
brighter lines of division between the Democratic Party and the
GOP.
In strikingly similar language, Internet-generation
Democratic activists from Moulitsas to Eli Pariser, the 24-
year-old executive director of MoveOn's giant PAC, describe
Clinton's effort to reorient the party toward capturing
centrist voters as ``obsolete'' in a highly partisan era that
demands, above all, united opposition against the GOP.
Moulitsas and Pariser, like most other voices in the Internet
activist base, want a Democratic Party focused more on
increasing turnout among its partisans than on persuading
moderate swing voters. Both, in other words, want a party that
emulates Bush's political strategy more than Clinton's.
``It may be in the 1990s, there was a middle; there isn't a
middle now,'' Pariser says. ``You have a Republican Party that
is willing to break all the rules and accept no compromises to
get what they want. In the face of that, saying `I'll meet you
halfway' is as sure a recipe for disaster as I know. You have
to fight fire with fire.''
Virtually all Democrats, even the most moderate, are
growing more partisan as the battles with Bush escalate. But
many Democratic moderates still fear that, both in substance
and style, the politics that the Internet base is demanding may
be leading the party away from the swing voters, especially in
the culturally conservative red states it needs to regain
Congress and the White House.
``The Internet is certainly a generator of some very
positive factors for Democrats. But it's also a very small
slice of our party, and if that slice dominates the entire pie,
we're in serious trouble,'' says former Rep. Tim Roemer, D-
Ind., a centrist whose bid earlier this year for the party
chairmanship stalled at the starting gate after intense
opposition from the Left.
Yet even while some centrist groups such as the DLC are
warning Democrats to distance themselves from liberal Internet-
based voices like Daily Kos and MoveOn, the party is more
overtly pursuing their help in the widening confrontations with
Bush. On struggles like the fight over judicial nominations,
party leaders such as Senate Minority Leader Harry Reid of
Nevada are now appearing at MoveOn rallies and holding
conference calls with liberal bloggers.
Tellingly, even some traditionally centrist Democratic
voices are wooing the Internet base. Simon Rosenberg, the
founder of the New Democrat Network, a political action
committee for Clintonesque New Democrats, courted the Internet
activists in his unsuccessful bid for the DNC chairmanship
earlier this year. Reversing Roemer, Rosenberg believes that
party moderates must learn from the Internet activists'
critique of Clinton's strategy.
``The core thing this new Internet culture is looking for
is recognition that the highest order of our politics today is
stopping Bush,'' Rosenberg says. ``Circumstances have changed
[since Clinton's presidency]. I do believe the New Democrats
have been too slow to recognize * * * that [the Republicans]
must be stopped at all costs.''

THEY DON'T NEED THE INTERNET AS MUCH AS WE DO

In the 2004 presidential campaign, the Internet was more
visible and consequential in American politics than ever
before. It became a mass medium for obtaining political news.
The most comprehensive study [PDF] on the subject, by the
nonpartisan Pew Internet & American Life Project, found that
during the campaign about 63 million people acquired political
news online, nearly double the number who did just four years
earlier.
In the physical world and online, the number of people who
participate in political activities is much smaller than those
who read about them. But on the Internet, participation is
growing substantially. The Pew study, based on a national post-
election survey, estimates that last year 7 million people
signed up to receive e-mails from the presidential campaigns; 4
million volunteered online for the campaigns; and 4 million
contributed money to political efforts through the Internet. In
2000, only half as many donated online, Pew found.
About the same proportion of Republicans, Democrats, and
independents used the Internet to acquire political information
in 2004. But Pew's research found that Democrats and liberals
pursued political activities over the Internet more frequently
than Republicans and conservatives did. Democrats were more
than twice as likely as Republicans to volunteer online, and
nearly five times as likely to contribute money, according to
unpublished data from the study.
The disparity reflects the relative importance of the
Internet in each party's political infrastructure. Republicans
have also aggressively increased their capacity on the
Internet. The Republican National Committee has a 7.5 million-
name activist e-mail list it mobilizes to support
administration initiatives. The Bush campaign used the Internet
to help organize volunteers for its successful get-out-the-vote
campaign. And conservative blogs have developed large
followings--as they demonstrated by generating such a rapid
backlash against recent comments by Sen. Richard Durbin, D-
Ill., about Guantanamo Bay.
But the Internet is exerting less influence over the
direction of the Republican Party than that of the Democratic
Party, because it plays a much smaller role in the overall GOP
political machine. Internet fundraising hasn't been as crucial
for Republicans, because they have both a bigger base of
financial support in the business community and a more
developed small-donor direct-mail program dating back to the
1970s. Blogs aren't as important for Republicans as they are
for Democrats, because talk radio, dominated by conservative
hosts, already provides the GOP an effective channel outside
the mainstream media to distribute its message. ``They don't
need the Internet as much as we do,'' says Wolfson, a top
adviser to Sen. Hillary Rodham Clinton, D-N.Y.
Indeed, Democrats are increasingly relying on the Internet
to match the roles that both talk radio and direct mail play
for Republicans.
In the same way conservatives court talk radio, Reid, for
instance, held a conference call with liberal bloggers in late
April to press the party message in the battle to preserve the
filibuster for judicial nominations. Shortly thereafter,
MoveOn, by far the largest online group in either party, turned
out scores of volunteers for 192 rallies on the issue across
the country on the same day. Earlier, the group generated
40,000 phone calls in a single day by dispatching volunteers
with cellphones to ask neighbors to urge their senators to
oppose the filibuster ban.
The Internet's most dramatic contribution to the Democratic
Party has come on the bottom line. In the Democratic primaries
last year, the Internet ignited Dean's insurgent bid by
generating a flood of small online donations that ultimately
provided about half of all his money. In the general election,
John Kerry stunned the political establishment by remaining
competitive with Bush in fundraising, largely because the
Democrat raised $80 million in Internet donations for his
campaign and another $40 million from his online list for the
Democratic National Committee. Meanwhile, MoveOn says that
along with its PAC and its voter fund, it collected another $50
million in online contributions (as well as $10 million more
from large donors such as liberal financier George Soros).
In all, Democrats and their allied groups probably raised
about $300 million online in 2004, estimates Tom Matzzie, who
helped run Kerry's Internet campaign and now works as MoveOn's
Washington director. That means the Internet accounted for
about 15 percent of the $2 billion that the Center for
Responsive Politics estimates the Democrats and their allied
groups spent in the 2004 campaign. (Republicans raised about as
much overall, but relied on the Internet much less; although a
comparable estimate for the entire party isn't available, the
Bush campaign raised less than one-fifth as much online as
Kerry did, which may give a sense of scale.)
Whatever the exact figure, the amount of political money
and activity generated on the Internet in 2004 represented a
quantum leap over the levels of 2000 or 2002. (MoveOn's PAC
alone increased its online fundraising tenfold from 2000 to
2004.) The audience for blogs, though still small compared with
mass media like talk radio or daily newspapers, is steadily
growing.
Almost all analysts expect the political use of the
Internet to expand at least as much over the next four years.
``It is going to just explode between now and 2008,'' says Joe
Trippi, Dean's 2004 campaign manager. Matzzie said recently
that Democratic candidates and groups would likely collect as
much as $1 billion on the Internet for the 2008 election.
Veteran Democratic strategist Tad Devine predicts that the next
Democratic presidential nominee will reject the public
financing system, not only for the primary, as Kerry and Bush
did, but also for the general election (which no candidate has
ever done) to preserve the freedom to raise unlimited money
over the Internet.
These projections are encouraging Democrats about their
ability to compete financially and organizationally with the
GOP. But one of the most profound truths in politics is that no
money, or any other form of support, is free; it all arrives
with some kind of price tag. Few Democrats have thought
seriously about what that price tag may be for the lifeline the
Internet base is now offering them. The Internet activists
believe they are liberating the Democrats from the demands of
``special interests'' by creating an alternative source of
grassroots money. But the Internet support, financial and
otherwise, comes with its own strong demands, as recent visits
to two of the movement's leading figures demonstrated.

ELI PARISER AND MARKOS MOULITSAS

It speaks volumes about the Internet's tendency to diffuse
power that two of the most influential figures in online
liberal politics work alone, in their homes, in neighborhoods
that have hosted far more rent parties than black-tie dinners.
Eli Pariser, the executive director of MoveOn's giant
political action committee, and Markos Moulitsas, the founder
and ringmaster of the popular Daily Kos Web site, have emerged
as two of the principal strategists shaping liberal use of the
Internet.
Pariser, working with Boyd and Blades and MoveOn's small
group of 13 other employees, runs a vastly larger institution
than Moulitsas does. MoveOn has become perhaps the largest
source of funds, volunteers, and activism (such as e-mail and
grassroots lobbying campaigns) for Democrats outside of
organized labor. MoveOn officials believe that their
membership, now growing by 75,000 per month, could reach 5
million by 2006 and perhaps 10 million by 2008.
Moulitsas is more like a guerrilla force compared with
MoveOn's teeming infantry. He says his site receives 500,000
visits a day, more than any other political Web log (although
many say figures on blog audiences are notoriously fuzzy, and
Moulitsas acknowledges no one knows how much of that traffic
represents repeat visits from the same readers). He estimates
that his site raised about $700,000 for candidates in the 2004
election. That's not bad for someone armed with only a laptop,
but MoveOn occasionally takes in that much in a single day.
Daily Kos's real influence is more indirect; it comes from
the site's ability to launch ideas through the Democratic
universe and to some extent the mainstream media, too.
Moulitsas thinks of himself not as a journalist, but an
activist. His principal goal, he says, is to provide ``talking
points'' that Democrats around the country can use to persuade
friends and neighbors, much the way conservative talk radio
equips millions of Republican listeners every day with a common
set of arguments and outrages for water-cooler conversation.
``I look at this as armies,'' Moulitsas says. ``It's training
our troops how to fight rhetorically.''
Both men emphatically keep their distance from the
Democratic power structure in Washington. Pariser works out of
the apartment he shares with his girlfriend on an ungentrified
block south of Brooklyn's fashionable Park Slope; within a
block of his building are shops selling off-price jeans,
Mexican and Ecuadoran restaurants, and a pizza place where the
crowd of teens hanging out one recent sunny afternoon included
a young man with a fresh shiner under his right eye. Pariser is
arguably one of the 50 most powerful people in the Democratic
Party, and he doesn't own a car. He opens his apartment door
wearing a T-shirt that reads, ``I [heart] Social Security.''
Moulitsas is a bit more settled. He owns a car (a beat-up
Subaru) and writes from the house he shares with his wife and
infant son in a weathered Berkeley neighborhood known as the
flats. When he moved in, there were crack houses on his street.
Often he'll file his first daily posts via his laptop while
he's still in bed.
The two men share little in personal style. The e-mails
from Pariser to MoveOn members usually have the earnest and
friendly tone of a chat at the corner store. The biting
exchanges between ``Kos'' and the ``kossacks,'' who post
responses to him and to one another on the site, sound more
like arguments at the corner bar.
Pariser almost always considers his words carefully, as if
imagining how they would look in print. In person, Moulitsas is
soft-spoken, ingratiating, and quick to laugh. But online, he
is confrontational, impulsive, and unequivocal; the other day,
he sweepingly dismissed the Democratic Leadership Council, Joe
Lieberman, and The New Republic magazine as ``tools of the
GOP.'' In 2004, Kerry's campaign cut its link to Moulitsas's
Web site after he wrote that he felt ``nothing'' when four
American contractors were killed in Falluja, because ``they are
there to wage war for profit.''
Neither are Pariser and Moulitsas ideological twins.
Pariser and MoveOn fall in the party mainstream on most
domestic issues (the group, for instance, has stressed fiscal
discipline). But they define the Democrats' left flank on
foreign policy. MoveOn as an institution, and especially
Pariser as an individual, not only opposed the war in Iraq, but
resisted military action in Afghanistan. MoveOn now is pushing
Democrats to demand a deadline for removing American troops
from Iraq.
Moulitsas is more eclectic. He served a three-year stint in
the Army, and although he opposed the Iraq war, he supported
the invasion of Afghanistan and calls himself a ``military
hawk.'' His favorite Democrats aren't Eastern cultural liberals
like Kerry, but Westerners who combine economic populism with
libertarian views on social issues like gun control. For the
2008 Democratic presidential nomination, Kos is currently
touting Montana's new governor, Brian Schweitzer, a favorite of
both the National Rifle Association and Democrats who yearn for
an unabashed populist message.
The careers of Pariser and Moulitsas have unfolded in
contrasting styles as well. Pariser has been a political
prodigy, the equivalent of a baseball player who makes the
major leagues without ever stopping in the minors. The son of
1960s activists who founded an alternative high school in
Maine, he was a recent college graduate working for a nonprofit
in Boston when the terrorist attacks of September 11, 2001,
shook America. Pariser quickly launched a Web site that
promoted a petition resisting a military response to the attack
(he urged ``moderation and restraint''). Even though polls
showed that most Americans supported the attack on Afghanistan,
within two weeks Pariser had collected an astonishing 500,000
names for the petition. Soon he was receiving calls from media
outlets as far away as the BBC. ``They said, `We've been
hearing a lot about this. Who are you?' '' Pariser later
recalled. ``[I said] `I'm 20 years old; I don't know who I am.'
''
Later that fall, Pariser brought his names to MoveOn
(doubling the e-mail list the group had assembled during
Clinton's impeachment) and joined the group as an organizer.
Eventually, he directed MoveOn's campaign against the Iraq war
(which virtually doubled the size of its e-mail list again).
Now, with founders Wes Boyd and Joan Blades preferring a less
public role, he's emerged as the group's most visible figure
(at a recent MoveOn rally, he was introduced as ``the man whose
second home is your in-box''), and an architect of its efforts
to expand beyond cyberspace into on-the-ground organizing. A
few months ago, Senate Democrats invited him to address them
during a retreat.
Moulitsas took a more circuitous route to his identity as
the fierce Kos. He split his youth between Chicago and El
Salvador (his mother's native country), where he lived amid a
brutal civil war. After returning to the Chicago suburbs for a
rocky adolescence, he enlisted in the Army at 17 and spent two
and a half years with an artillery unit in Germany. College and
law school followed, as Moulitsas contemplated careers as
diverse as journalism and composing film scores. He was working
as a project manager for a Web-designing company in San
Francisco when he started his blog in May 2002, angered by
Bush's direction and inspired by the example of the liberal
MyDD Web site.
After years of uncertainty, he had discovered his niche.
Kos quickly found an audience by expressing the unmediated
anger of the Democratic base toward Bush, and even more so
toward Democrats who cooperated with him, especially over the
war in Iraq. Moulitsas shrewdly built a community by providing
readers unusual freedom to post their own thoughts, and rose to
the forefront of political blogs on the same wave of grassroots
liberal discontent with the Democratic leadership that
initially propelled Dean's presidential campaign. (Kos was one
of Dean's first promoters and consulted for his campaign on
Internet strategy.) Moulitsas's site has been so successful
(Daily Kos has continued to gain readers even since the 2004
election) that it has not only become a full-time job but also
allowed him to edge into a new role as a media entrepreneur by
launching a series of sports blogs.

IN SEARCH OF A WARRIOR PARTY

For all their differences in style, temperament, and
experience, Pariser and Moulitsas, in conversations three days
apart, demonstrated a series of shared political assumptions
that reflect the solidifying consensus in the online Democratic
community. Each man believes that the Democratic Party must
change in the same way and that the rise of the Internet
activist base is the critical lever to force that change. In
Washington, many Democratic consultants consider the Internet a
new source of funding for the party's familiar approaches and
strategies. But Pariser and Moulitsas made clear that they, and
those they represent, are looking for something very different.
Both men believe that the small-donor base developing on
the Internet will allow Democrats to reduce their reliance on
business for campaign financing. That, they argue, would allow
the party to pursue a much more economically populist anti-
corporate message that they believe could win back blue-collar
voters who have trended Republican over the past generation
primarily on issues relating to values, taxes, and national
security.
Both say they recognize that Democrats cannot hold together
for a scorched-earth opposition to Bush on every issue. Neither
Moulitsas nor MoveOn, for instance, was enthusiastic about the
recent Gang of 14 deal on judicial nominations, but both
accepted it as a necessary tactical retreat that could allow
Senate Democrats to fight the filibuster issue again, against
the backdrop of a Supreme Court nomination.
But both men want a party of warriors who will link arms to
resist Bush's principal initiatives, especially the
restructuring of Social Security. ``When our core values are
being attacked,'' Moulitsas argues, ``the party needs to stand
together.'' In the long run, both want Democrats to move away
from the Clinton model of courting swing voters through ``Third
Way'' moderation and turn instead toward a Bush approach that
tries to build a majority mostly by inspiring a large turnout
from its base with an unapologetically polarizing agenda.
To Moulitsas, the key lesson from 2004 is that Bush won re-
election while losing moderates badly and independents narrowly
to Kerry, according to exit polls. ``We won the center and it
wasn't enough,'' he insists. ``So, clearly, we have to reach
out more to our base.''
Pariser, similarly, argues that Bush's re-election victory
demonstrated that the ``passion'' of hard-core followers was
``the most powerful political asset around. It was more than
money, more than message--it's that [Bush] harnessed that
energy. To dismiss the energy on our side would be a tremendous
mistake.''
The two differ somewhat on the tactical question of how to
tilt the party in this direction. But the difference is of
degree, not kind. Moulitsas is heavier on sticks than carrots.
His Web site crackles with attacks on the Democratic Leadership
Council and other party centrists, and it actively supports the
liberals searching for a candidate to mount a primary challenge
next year against Lieberman.
Moulitsas says he's not promoting civil war between
Democratic liberals and moderates. Some Democrats representing
conservative states, like Nebraska's Sen. Ben Nelson, need to
vote with Bush at times, he acknowledges. But, he says, the
party shouldn't tolerate defection on its core priorities,
Democrats who consistently criticize other Democrats, or those
from blue states who vote with Bush.
Those latter two points explain why he's so eager to
challenge Lieberman, who has become a target of the Internet
activists for defending the Iraq war and at times criticizing
the Left. A primary against Lieberman, says Moulitsas, ``will
send a message that behavior that harms the party is going to
have repercussions.''
Moulitsas speaks with the abandon of someone who
understands he is speaking only for himself. Pariser, as the
voice of an organization whose size makes it a target both for
other Democrats and for Republicans like Karl Rove, who
denounced it in June, is more cautious, but still ultimately
eager to push the party in the same direction that Kos is
pushing it.
In contrast to its earlier emphasis on Iraq, MoveOn this
year has focused primarily on domestic issues that unify
Democrats, like Social Security or the battle against Bush's
judicial appointments. Rather than intimidating Democrats who
support Bush, Pariser says, MoveOn hopes to reward those who
confront him, with initiatives like the massive fundraising
drive for Byrd. ``We believe it's the role of the progressive
movement to create the political space where politicians say
and do the right thing,'' Pariser says.
But MoveOn hasn't ruled out more-coercive efforts to compel
party discipline. It turned heads recently when it ran its ads
criticizing Rep. Hoyer for supporting the Bush-backed bill
toughening bankruptcy laws. And while MoveOn, with an eye on
2006, is focusing mostly on strengthening its volunteer
organization in congressional districts held by Republicans,
Pariser says that it's maintaining the option of building
grassroots organizations to pressure Democrats who vote with
Bush too often.
During a several-hour conversation, Pariser frequently said
that the group had not yet decided to take such pressure to the
next, far more explosive, step by supporting liberal
challengers to Democratic incumbents. But he also repeatedly
made clear that the group wasn't closing off the idea. ``That's
a question we are talking about now,'' he said.
In all of this, Pariser and Moulitsas, like many of those
they represent on the Internet, appear very much the product of
the Democrats' fall from power. Almost everyone in the party's
Washington hierarchy can remember a time when Democrats thought
of themselves as the nation's natural majority party. Pariser
and Moulitsas are children of the minority. For Democrats, they
believe, the first step toward recovery is to acknowledge that
revival requires more than tinkering. In their eyes, it will
require Democrats to think of themselves not as a governing,
but an opposition, party that bloodies the majority Republicans
by any means necessary--much as Republicans did under Newt
Gingrich in the final years of their assault against the
decades-old Democratic majority in the House of
Representatives. ``D.C. is still trapped in 1970s thinking,''
sighs Moulitsas. ``It is hard for them to realize we really are
a minority party. What they have to understand is that
Republicans became a majority party only by being a really
effective opposition party.''

DEMISE OF THE ``THIRD WAY''

One theory of international relations holds that wars most
often start when a new force emerges to disrupt an established
power structure, the way, say, Germany did in the early 20th
century. Much the same dynamic is under way in the Democratic
Party today. Through Clinton's two terms, centrists dominated
the party. Now, largely because of the rise of the Internet
activist base, the Left is resurgent. And that is heightening
tensions.
For liberals who chafed under Clinton's reign, the
emergence of MoveOn, Dean's Democracy for America, and the
blogs is like the arrival of the cavalry. Robert Borosage, co-
director of the liberal Campaign for America's Future, has been
pulling in the tug-of-war between Democratic liberals and
centrists for more than two decades. He sees the development of
the Internet as a decisive tilt in that struggle.
``I think this means, certainly at a presidential level and
probably at a senatorial level and maybe at a congressional
level, candidates will always know there is a slot on the
progressive side of the dial that can be competitive
financially * * * and they don't have to bow to the large-money
interests in the Democratic Party in order to be financially
competitive,'' he says. ``Someone will always compete for that
slot, and that, I think, transforms elections and transforms
the opportunity to create the politics that many of us have
thought is necessary to re-create a progressive majority for
change--one that has a clear economic message for working
people.''
Although liberals like Borosage unreservedly embrace the
new Internet forces, Democratic centrists have divided over how
to respond. The most vehement camp views the Internet Left as a
danger. These activists argue that for all of the
organizational and technological capacity of the Internet
activists, they are pushing the party toward policies,
especially in foreign affairs, that will fatally narrow the
Democrats' support.
Peter Beinart, the editor of The New Republic, developed
this case extensively in a controversial cover story last
winter when he called on Democrats to ``take back'' the party
from MoveOn and the Internet Left--what he called ``the
softs''--much the way liberals after World War II rejected
alliance with domestic Communists. Beinart was especially
impassioned, but he is hardly alone. The DLC promoted his
conclusions. And several other centrist party strategists worry
that the hyperpartisan turn-out-the-base strategy that many
online activists demand won't work for Democrats, because polls
consistently show that more Americans consider themselves
conservative than liberal.
``We are more of a coalition party than they are,'' says Ed
Kilgore, the policy director for the DLC. ``If we put a gun to
everybody's head in the country and make them pick sides, we're
not likely to win.''
Simon Rosenberg defines the other pole of the debate among
centrists. In May, Rosenberg appointed Moulitsas as a founding
adviser to a new think tank, the New Democratic Network,
established to craft fresh political strategies for Democrats.
Rosenberg has not only welcomed the Internet activists, but
also argued that New Democrats need to learn from their call
for a more partisan resistance to Bush.
Strikingly, Rosenberg accepts the Internet Left's
fundamental argument that Democrats should move away from
Clinton's efforts to court the middle by finding a Third Way
between traditional Democratic and Republican approaches. Such
efforts to find compromises between the parties, Rosenberg
says, have become ``obsolete'' in the face of Bush's crusading
conservatism.
``As powerful as the Third Way formulation was in the
1990s, it is an antiquated way of looking at the world * * *
and it is not a viable position in the United States right
now,'' Rosenberg says. ``What people [in the Democratic Party]
are looking for is not a Third Way; they are looking for a
modern progressive movement that can fight the conservative
movement. [The choice] has become binary, and that is what has
changed.''
In this dispute, each side can already point to examples of
Internet-base influence that support its case. Many give the
online activists credit for helping to solidify Democratic
opposition to Bush's plan to restructure Social Security--in no
small part by so openly threatening primary challenges against
Democrats, like Lieberman, who have considered supporting him.
``It has helped stiffen spines, and I think that's a good
thing,'' said Wolfson.
Conversely, many centrists believe that the demands of the
Internet Left influenced John Kerry's decision in 2003 to vote
against Bush's $87 billion request to fund the war in Iraq.
That vote became an albatross for Kerry in the general election
when Bush used it as his prime example to accuse the Democrat,
who had voted to authorize the war, of flip-flopping on issues.
MoveOn had urged Democrats to oppose the funding, and Kerry
cast his vote at a moment when Dean's presidential campaign,
fueled largely by the torrent of online donations, was at its
zenith.
Pariser and Moulitsas both say that the problem wasn't
Kerry's vote, but his failure to effectively defend it. But to
those who are uneasy about the party's direction, Kerry's
stance against the funding dramatized the potential cost with
swing voters for pursuing policies meant to energize the
Internet base.
Like many other Democrats who have avoided extreme
positions in this debate, Wolfson says that the challenge for
Democrats is to maximize the tangible benefits the Internet
provides without losing sight of a larger electorate whose
views aren't nearly so fervent.
``It's wonderful to have a network of donors through the
Internet that is the equal of the Republican direct-mail donor
base, * * * and it is obviously important for Democrats to have
a way to talk to Democrats,'' he says. ``The downside is if we
have a conversation [only] with ourselves. And at this moment,
the center of gravity in the U.S. is not on the left; it may
not even be on the center-left, so a conversation geared to the
left is, by definition, exclusionary.''
At a time when Internet activists are agitating for
challenges to party centrists, and liberal blogs are crackling
with denunciations of legislators who vote with Bush, though,
it seems unlikely that the party can reap the benefits of the
online activists and donors without bending toward the
confrontational politics they are demanding. ``I don't think a
Democratic politician anymore can poke the base in the eye,''
says Matzzie, MoveOn's D.C. director. ``They can, but only if
they are willing to walk away from everything the Internet can
give them.''

THE ULTIMATE TEST

This isn't the first time that technological change has
triggered ideological turmoil. In 1972, the emergence of
direct-mail fundraising helped George McGovern overwhelm the
party establishment and seize the Democratic presidential
nomination on an insurgent anti-war platform. Later in the
decade, those same direct-mail techniques, adapted by
conservatives, powered the rise of Jesse Helms, the ``New
Right'' advocacy groups, and then Ronald Reagan. The spread of
talk radio provided a comparable boost for the next great wave
of conservative advance, the Republican takeover of Congress in
1994.
The common thread is that each of these new tools proved
more effective at mobilizing ardent activists than moderate
voters. All provided new means to concentrate and harvest the
emotion of an ideological vanguard that cared enough about
politics to respond to requests for contributions or volunteers
or calls to Capitol Hill. In that way, each technological
advance strengthened the ideological edge of the parties
against the center, just as the Internet is doing in the
Democratic Party today.
But that history also shows that it's wrong to assume
technology is destiny in determining a party's direction.
Conservatives, aided by the new technologies of direct mail and
talk radio, have consolidated their control of the Republican
Party over the past three decades. Liberals, until recently,
have lost ground in the Democratic Party for roughly the same
period. The difference is that the Right has elected far more
of its true believers to office than has the Left. McGovern,
remember, lost 49 states in the 1972 presidential race; Reagan
won 49 in 1984. Even today, the share of Republican senators
and House members who qualify as hard-core conservatives
exceeds the share of Democrats who could be identified as die-
hard liberals.
This history frames both the opportunity and challenge for
the reinvigorated Left that is now organizing online. The
Internet's tremendous power to transmute ideological passion
into money and activism is increasing the Left's stature inside
the Democratic Party for the first time since at least Reagan's
1984 landslide over Walter Mondale, and perhaps since the
McGovern campaign itself. But the Left's position inevitably
will erode again unless the strategy it is promoting wins
elections. After all, Dean failed to win a single Democratic
primary and Kerry lost the general election, despite the
unprecedented energy that each man unleashed on the Internet.
The ultimate test of political success isn't inspiring passion
or even generating volunteers and contributions; it's
attracting more votes than the other side.
Moulitsas, for one, understands that as the influence of
the online Democratic activists grows, so does the pressure on
them to produce results. ``The centrists' strategy [in the
1990s] didn't turn things around, and the decline for Democrats
just kept going,'' he says. ``If we get our way, and we have a
more partisan Democrat [as the presidential nominee] and the
money is there, and in eight years we haven't made any headway,
I'm willing to say we should try something else.''

APPENDIX D

----------

[From Roll Call; Apr. 13, 2005]

MoveOn Goes Mainstream

(By Chris Cillizza)

Once regarded warily by much of the Democratic
establishment, the liberal grass-roots group MoveOn.org is
being increasingly courted by Democratic officeholders for its
3 million members--and their deep pockets.
The Web-based advocacy organization, by far the left's most
potent fundraising operation outside of the Democratic Party
itself, has raised its profile considerably on Capitol Hill in
recent months.
``It's been an interesting experience for us,'' said Eli
Pariser, the executive director of MoveOn.org's political
action committee. ``I don't know to what degree it's a
political move and to what degree Democrats understand now it
is important to court our constituency.''
Republicans have pounced on the increased cooperation,
seeking to paint Democrats as beholden to their party's liberal
wing.
The National Republican Senatorial Committee recently
released a six-page research document titled ``How Much is that
Donkey in the Window,'' filled with positive comments made by
Democratic leaders regarding MoveOn and highlighting the
group's issue positions.
Most controversial among them are the organization's
opposition to the use of force in Afghanistan following the
Sept. 11, 2001, terrorist attacks, and to the war in Iraq.
``The Democrat Party at an unprecedented level has become
best friends withMoveOn.org,'' said NRSC spokesman Brian Nick.
``On the major issues, we are [seeing] MoveOn.org is moving in
lock step'' with the Democratic Party, he added.
The most high-profile event illustrating the new synergy
between MoveOn and Democrats came March 16 with a rally on
Capitol Hill.
It drew Senate Minority Leader Harry Reid (Nev.) and Senate
Minority Whip Dick Durbin (Ill.) as well as Sens. Charles
Schumer (N.Y.), Robert Byrd (W.Va.), Edward Kennedy (Mass.) and
Barbara Boxer (Calif.).
MoveOn followed that event with an e-mailed fundraising
plea on Byrd's behalf from Illinois Sen. Barack Obama (D). The
message raised more than $800,000 for the West Virginia Senator
in just 72 hours.
(Last October, Obama wrote two fundraising e-mails for
MoveOn that netted $1.2 million for seven Senate candidates
around the country.)
Behind the scenes, the organization has gained considerable
entree as well.
House Minority Leader Nancy Pelosi (Calif.) has worked with
MoveOn since being elected the top Democrat in the House
leadership in late 2002, but the relationship between the two
grew closer during the fight over adding a prescription drug
benefit to Medicare, said spokeswoman Jennifer Crider.
Crider added that Pelosi or her staff have calls and
meetings ``on a weekly basis'' with representatives of MoveOn.
The Senate Steering and Outreach Committee holds a Monday
telephone call with roughly 20 outside advocacy organizations
whenever Congress is in session. MoveOn has been a participant,
though infrequently, sources said.
Susan McCue, Reid's chief of staff, said that MoveOn
``effectively represents an important part of our
constituency.''
Laura Gross, a spokeswoman for the Democratic National
Committee, also praised MoveOn's efforts.
``Obviously they are relaying the Democratic Party message,
which is in line with what the DNC is doing and what the Hill
is doing as well,'' said Gross.
She added that DNC Chairman Howard Dean participated in a
March 10 conference call with members of the MoveOn PAC.
Pariser said that while MoveOn's interests have paralleled
those of the Democratic Party of late, that will not always be
the case.
``We are not the party, and on issues where we diverge from
some in the party we are going to'' make it clear, Pariser
promised.
On Monday, for example, MoveOn sent an e-mail designed to
raise money for radio ads hitting House Members who support the
stiffening of bankruptcy regulations--a bill that will be voted
on this week.
Its most recent effort notwithstanding, Pariser
acknowledged that MoveOn's members recognize that ``we are at a
time when the Democrats are the only thing standing between
Republicans and disaster'' on such issues as Social Security
and judicial nominations.
In recent weeks, MoveOn has aired ads on both issues in
targeted districts and on national cable.
That connection has not gone unnoticed by Republicans who
believe that MoveOn's donations to Democrats--estimated to be
in the hundreds of millions of dollars--during the 2004 cycle
bought them a seat at the table with the party.
Nick and Republican National Committee Deputy
Communications Director Tracey Schmitt made reference to an e-
mail to MoveOn members sent earlier this year by Pariser, in
which he wrote: ``Now it's our party: We bought it, we own it
and we're going to take it back.''
Schmitt said such a statement ``should trouble the party.''
``After spending millions of dollars to defeat President
Bush, they are now going after his agenda,'' Schmitt added.
``They are completely out of touch with mainstream America.''
Pariser dismissed such criticisms as a sign of Republicans'
anxiety over his organization's activities.
``Republicans are trying very consistently to wedge between
this big group of middle-class Americans and the Democratic
leadership,'' he said. ``It's not working because the charge is
baseless.''
Privately, Democratic insiders admit that publicly
associating with MoveOn does carry potential pitfalls for the
party, but they argue that the money and grass-roots energy the
group can deliver make such risks worthwhile.
Among elected Democratic leaders, there is a ``recognition
that MoveOn can excite the troops and till the ground to grow
more Democratic activists in a way that makes any risks
associated with their activities or their views less important
than the rewards we can gain,'' one party strategist said.
MoveOn ``can be embraced when they need to be embraced and
you can distance yourself from them when you need to,'' the
source added.

APPENDIX E

----------

[From the St. Petersburg Times; Feb. 18, 2005]

Unshaven, Unbowed and in Our Face

(By Adam C. Smith)

Tom Matzzie describes himself as a pacifist techno geek.
Maybe so, but MoveOn.org's man in Washington sounds like one
cocky computer nerd.
Between bites of sushi, Matzzie noted how senior Democratic
senators eagerly rearrange their schedules to meet with MoveOn.
And how MoveOn would be comfortable helping defeat Democratic
Rep. Allen Boyd if the Panhandle congressman continues
embracing private accounts for Social Security.
What's more, ``We're going to have to have some discussions
with Bill Nelson,'' because Florida's senior senator appears
reluctant to block President Bush's controversial judicial
nominations. And the centrist Democratic Leadership Council
that helped guide Bill Clinton into the White House? So 1990s.
``The candidates want nothing to do with the DLC, it's so
out of vogue,'' the 29-year-old scoffed. ``If the DLC
disappeared from the Democratic Party tomorrow, no one would
notice. If MoveOn weren't part of the party, people would
notice and care.''
Most of the leaders in this new powerhouse in the
Democratic party establishment are younger than 40, which
MoveOn suggests makes them better equipped to re-invent
politics. They're known to millions of donors by their first
names--Tom, Eli, Adam--and tend to go for facial hair.
``A bunch of us have beards,'' Matzzie chuckled, ``because
we're all self-conscious about the whole age thing.''
Having helped revolutionize online organizing and
fundraising, MoveOn isn't about to let the Democratic Party
forget it. The organization and its legions of Internet-savvy
activists are determined to have their say, as have labor
unions, trial lawyers and other longtime Democratic
fundraisers.
``In the last year, grass-roots contributors like us gave
more than $300-million to the Kerry campaign and the DNC, and
proved that the Party doesn't need corporate cash to be
competitive,'' MoveOn's 24-year-old executive director said in
a recent e-mail urging members to back an outsider for chairman
of the Democratic National Committee.
``Now it's our Party: we bought it, we own it, and we're
going to take it back.''
A lot of Democrats are terrified at the prospect.
Michael Moore shaved and donned a suit to visit with Jay
Leno after the November election. America Coming Together
packed up its Palm Pilots and sent its armies of Democratic
door-knockers back to conventional jobs. Bruce Springsteen and
the rest of the rockers against Bush stepped off the political
stage.
But MoveOn, after catching its breath, is roaring back into
action.
It launched TV ads blasting Bush's Social Security
proposal. It mobilized members to help elect Howard Dean DNC
chairman. It's hiring 50 organizers to launch a full-time field
organizing program in 1,000 communities.
``MoveOn has always been about building up momentum on
issue after issue. Now, after admittedly losing a major battle,
we're stronger than ever before,'' said Eli Pariser, executive
director of the 3.1-million member group.
The presidential election loss that so devastated countless
Democratic activists, Pariser said, only motivated more people
to get active. An additional 250,000 people have since joined
MoveOn, tens of thousands of them apparently in response to the
president's call to revamp Social Security.
In 2004, MoveOn fielded canvassers across Florida and
flooded the airwaves with anti-Bush TV ads. But after spending
$60-million on the last election cycle, its influence could
increase dramatically in 2006, an off-year election where
energizing the party's base is all the more important.
``MoveOn will be able to ask our members to contribute to
the Florida governor's race faster than any organization in the
United States,'' Matzzie said. ``Literally millions of dollars
can come into the Florida governor's race overnight.''
MoveOn is at the forefront of a seismic shift in politics,
or at least Democratic politics. Only a few years ago, the
party depended mostly on unlimited ``soft money'' donations
from corporations and interest groups; many activists saw it
disconnected from its grass roots base.
Hokey as it sounds, forces like MoveOn and Howard Deaniacs
are replacing corporate and soft money-dominated politics with
real-people politics.
That might sound like great news for Democrats, but many
party insiders are groaning over MoveOn's rising profile. After
an election when most of middle America backed Bush, the
thinking goes, do Democrats really want to emphasize the livid,
lefty, antiwar wing of the party?
Peter Beinart, editor of the Democratic-leaning New
Republic magazine declared MoveOn and Moore the two greatest
obstacles preventing Democrats from winning majorities. He said
they make the party seem weak on national security.
Critics see a massive left-wing Ponzi scheme: MoveOn's e-
mail list keeps growing, its fundraising and spending keep
soaring, and little ultimately gets accomplished.
``MoveOn's building up their own brand and they're building
own fundraising base--possibly at the expense of the Democratic
Party,'' said Marcus Jadotte, a senior Kerry-Edwards campaign
adviser.
``Their involvement with the 2004 election was more focused
on building affinity with activist Democrats than defeating
George Bush. They didn't speak to the middle. They didn't focus
on enhancing the base, they focused on riling up the base.''
The wild-eyed liberal tag really bugs MoveOn's leaders. If
they only spoke for people on the fringe, they couldn't raise
so much money and wean the Democrats off corporate
contributions.
``MoveOn has taken only positions that have very broad
appeal, and that's because our goal is unifying a loyal
opposition to the Bush administration, which we find very
extremist,'' said Wes Boyd, 44, one of MoveOn's founders.
``Opposition to the Iraq war is a very mainstream position.''
MoveOn was created in the late 1990s by Boyd and Joan
Blades, 48, a couple from Berkeley, Calif., formerly best known
for the flying toaster screen savers and online game ``You
Don't Know Jack,'' created by their company, Berkeley Systems.
MoveOn began as a petition to leaders in Washington--as in,
censure Clinton and move on to more pressing issues--but its e-
mail list exploded over opposition to the war in Iraq.
Now it's a Democratic institution whose leaders and members
are unchastened by their loss in November. It wasn't MoveOn's
``liberal'' TV ads decrying the growing federal deficit and
faulty justifications for war that cost Democrats the election,
they say. Those ads were market-tested for effectiveness at
persuading voters, not simply preaching to the choir.
To MoveOn, the lesson of November is not that in-your-face
opposition to Bush is damaging to Democrats. Far from it. What
hurts Democrats most, they say, is lack of coherence and
reluctance to strong for their beliefs.
``A lot of party moderates are stuck in an old way of
thinking about politics, which doesn't jibe with the power
hungry, no-holds-barred style Bush has brought to Washington,''
said Pariser, who before joining MoveOn had created an online
petition urging restraint after the Sept. 11 attacks.
Even some of the most passionate disciples of online
organizing sometimes wonder about MoveOn's strategy. Take their
ads targeting Boyd, probably the most vulnerable Democrat in
Florida's congressional delegation.
``They're going after a Democrat?'' asked Joe Trippi,
Dean's former presidential campaign manager and a pioneer at
harnessing the Internet for campaigns.
``I'm not so sure their members would all agree with that.
* * * The organized party has to be closer to the grass roots,
and the grass roots over time is going to come to understand
that their party has to have a big tent. It's going to be a
maturing process, and obviously MoveOn is going to be a leader
in that.''
Pariser contends that MoveOn's semi-outsider status makes
it uniquely suited to help elected leaders in the party.
``We're acting as kind of an external whip, making sure
there are rewards for people who are helping move the message
and penalties when people go off message,'' he said.
``We're a team player.''
As congressional Democrats become increasingly aggressive
challenging Republicans and MoveOn continues revving up its
base, though, it's not clear yet who's leading the team.

APPENDIX F

----------

[From Roll Call; Apr. 27, 2005]

MoveOn Wants Sanders To Move Up to Senate

As expected, a full 96 percent of MoveOn.org members
believe the liberal organization should support Rep. Bernie
Sanders (I) if he decides to seek the Green Mountain State's
open Senate seat next year.
``You're willing to put your time and money where your
mouth is, too--thousands of you volunteered to help with the
campaign, and together you said you'd contribute over
$135,000,'' MoveOn.org Political Action Committee Executive
Director Eli Pariser said in an e-mail to the organization's
supporters. He noted that the show of support was just from
Vermont members.
``Since we're in the middle of our emergency campaign on
judicial nominations, it may be a few weeks before we're able
to raise money for Sanders from our whole base,'' Pariser said.
``Together, we'll make sure that Vermont sends a real
progressive to the Senate in 2006.''
Sanders has not formally entered the race to succeed
retiring Sen. Jim Jeffords (I) but has made no secret of his
desire to ascend to the Senate.
Jeffords decided to retire just last week so no one has
entered the race yet, save Republican Greg Parke, who was
already planning to challenge Jeffords next year.
Parke was the GOP candidate against Sanders last year in
the state's lone House race, and he lost badly.

APPENDIX G

----------

[From Roll Call; July 11, 2005]

Gop Sees MoveOn as Wedge

(By Chris Cillizza and Paul Kane)

From top White House operative Karl Rove to two of the
party campaign committees, Republicans have launched a full-
scale attack on MoveOn.org, questioning the liberal group's
patriotism and worldview.
These attacks appear to have two purposes: One is to put
the group and its Democratic allies on the defensive over
support for the war on terror. And the second is to drive a
wedge between Democratic candidates and the millions of dollars
that MoveOn's supporters have pumped into their campaigns.
With MoveOn fast becoming one of the Democratic Party's
most important fundraising sources, the second goal may end up
being the more important one.The 2006 Pennsylvania Senate race
provides a window into the developing battle over MoveOn.org.
State Treasurer Bob Casey Jr. (D) was featured recently in
a MoveOn e-mail designed to drive donors to support his
challenge to Sen. Rick Santorum (R). Within the first 24 hours,
the appeal brought in $150,000 for the Casey campaign.
But the National Republican Senatorial Committee
immediately went on the offensive with a release titled,
``Casey Moves In With MoveOn,'' alleging that the group's e-
mail on behalf of Casey shows how closely he is aligned with
the ``ultra-liberal left.'' John Brabender, Santorum's media
consultant, predicted that if Casey continues to accept MoveOn
money, he will have to answer for the group's controversial
policies, which include opposing military intervention in
Afghanistan.
``You can tell a lot about a person by the company they
keep,'' Brabender said. A group like MoveOn ``will have a lot
of trouble in Pennsylvania, particularly in the middle part of
the state. The group will be hung around Bobby Casey's neck.''
The rhetoric from Brabender and the NRSC is aimed at
forcing Casey into a no-win choice: He could pass up a generous
source of campaign cash, or he could accept MoveOn's ample
resources, yet face an assault over the group's issue stances.
Refusing MoveOn money is no small financial decision. In
less than 48 hours, the group raised $800,000 for the re-
election campaign of West Virginia Sen. Robert Byrd (D)--almost
single-handedly quieting rumors that the octogenarian would
retire his seat in 2006.
Eli Pariser, executive director of the MoveOn.org political
action committee, called the Republican tactics ``smart.''
``This is a very pure, very stable source of funds,'' said
Pariser about his organization. ``It is totally unlike the
rubber chicken model of fundraising.''
Leading Senate Democrats agree. ``They are trying to
discredit and smear MoveOn because it's so successful,'' said
Minority Whip Dick Durbin (D-Ill.), who added that the group is
``one of our most important'' fundraising avenues.
Democratic Senatorial Campaign Committee Chairman Charles
Schumer (N.Y.) said MoveOn has grown to be so important because
the group, through the use of e-mails, has turned grass-roots
fundraising upside down.
Long a bastion of conservatives, direct mail used to be the
most costly form of fundraising, barely yielding $1 raised for
every $1 spent but generally bringing in lots of cash and
spreading a sharply worded, partisan message in the missives.
But the costs of MoveOn's e-mails are negligible, and their
haul is often astounding, as Byrd discovered at the end of
March.
``Now MoveOn and others have caught up to [conservative
direct mailers] and surpassed them, and they're not happy about
it,'' Schumer said.
The campaign against MoveOn moved to a new level with
Rove's June 22 speech in midtown Manhattan, not far from the
site of the World Trade Center attacks.
Rove accused MoveOn and other liberals of wanting to
``offer therapy and understanding for our attackers.''
Democrats pounced on the remarks and demanded an apology from
Rove, noting that Durbin just the previous day had apologized
for likening treatment of prisoners at Guantanamo Bay to those
in Nazi Germany or in Soviet gulags.
But rather than issuing an emotional apology--as Durbin
did--the White House and Republicans went into full attack mode
on MoveOn and other liberals, including Democratic National
Committee Chairman Howard Dean.
The Republican National Committee issued reams and reams of
documentation on the positions of MoveOn and Dean regarding the
war in Afghanistan. The White House refused to offer even a
hint of an apology. And the NRSC sent out a fundraising e-mail
lambasting MoveOn, beginning with: ``Karl Rove was right.''
And a few days later, when MoveOn's pitch went out on
Casey's behalf, the NRSC again pounced on the group and
attacked the centrist-leaning candidate for allying himself
with a liberal group--a line of attack that the committee has
used mercilessly against Byrd ever since the late March
fundraising pitch on his behalf.
Rep. Tom Reynolds (N.Y.), chairman of the National
Republican Congressional Committee, said he did not necessarily
view the attacks on MoveOn as part of a party-wide effort to
drain Democratic funding sources. But, he agreed that it has
become a major financial engine for Democrats.
``They certainly have more money there than Howard Dean and
the DNC,'' Reynolds said, adding, ``Many of their investors
stand for extremist views.''
For a campaign expected to cost in the neighborhood of $20
million, Casey may not be in a position to reject MoveOn's
dollars even if doing so would save him some political
heartburn.
Jay Reiff, campaign manager for Casey, dismissed the idea
that his candidate would face any sort of choice.
``Bob Casey's positions are not going to change based on
who happens to endorse him,'' said Reiff. ``They endorsed him,
he didn't endorse them.''
In their attacks, Republicans are treading a familiar path.
For decades, Democratic candidates have come under fire
from Republicans for accepting campaign contributions from
trial lawyers and labor unions.
The GOP has also targeted both camps legislatively,
including curbs on class-action lawsuits and attempts to
prevent unions from using compelled dues for political
purposes. Both would effectively limit the ability of trial
lawyers and unions to aid Democratic causes.
While such arguments have at times caused Democratic
candidates some problems, they have rarely if ever driven them
to not accept donations from these interest groups. (Democrats
have also attacked Republicans for taking money from social
conservatives, big corporations and gun-rights groups, but that
tactic has not usually been as central to the party's campaign
strategy.)
Matt Keelen, a former Republican fundraising consultant
who's now a lobbyist with Valis and Associates, insists that
MoveOn is a special case.
``It is going to take some time, but MoveOn is making it so
easy with their radical, anti-American stances that, over time,
people are going to view them as the fringe--to the left of
Howard Dean,'' said Keelen.
Not so, say Durbin and other Democrats.
``The more they attack them, the more popular they are,''
Durbin said of MoveOn.
The GOP's ability to delegitimize MoveOn, to some degree,
hinges on how the war in Iraq plays out. In recent weeks,
support for the war has been sinking.
Rep. Harold Ford Jr. (D-Tenn.), who's running for the
Senate in a conservative state by positioning himself as a
centrist, said he has no problem if MoveOn wants to help him
raise cash.
``MoveOn.org hasn't placed one road-side bomb in Iraq,''
Ford said. ``Nor did MoveOn.org fail to plan an exit
strategy.''
While the group hasn't yet helped him, Ford said Rove's
attacks on MoveOn smacked of ``childish instinct.''
Pariser added that it will be difficult for Republicans to
attack a candidate for taking contributions from a group
``funded exclusively or largely by grass-roots people in $25
amounts.''
He points out that recent issues MoveOn has highlighted--
opposition to Social Security reform and support of an overhaul
of the campaign finance system--are in tune with a large
portion of the citizenry.
``There is no position that the organization as a whole has
taken that is outside of the mainstream,'' said Pariser. ``None
of those things are something that a candidate needs to fear.''

APPENDIX H

----------

[From USA Today; June 28, 2004]

``Outside'' Political Groups Full of Party Insiders

(By Jim Drinkard)

From his seventh-floor office, Jim Jordan can see the
headquarters of the AFL-CIO across the street. It's a three-
minute stroll from his office to the headquarters of John
Kerry's presidential campaign, which Jordan ran until last
November.
The room Jordan occupies was the office for Democratic
Party Chairman Terry McAuliffe last year while the party's
building was being renovated. Before that, it was used by Steve
Rosenthal, organized labor's former chief political
strategist-- and now Jordan's colleague in an enterprise often
described as a ``shadow'' Democratic Party. The shadow party's
office space is subleased from the AFL-CIO.
In that office is the Thunder Road Group, a communications
firm Jordan runs. Its primary clients are two independent
political groups, America Coming Together and the Media Fund.
To Republicans, Jordan epitomizes the web of links and
relationships among the Kerry campaign, the Democratic Party,
organized labor and a network of allied outside political
groups. They argue that his presence as a strategist for groups
that are spending tens of millions of dollars to boost Kerry is
clear evidence of illegal coordination.
The law forbids purportedly independent political groups
from coordinating their plans and strategies with the party or
candidates they support. That's because the outside groups can
raise and spend unlimited amounts of money, while campaigns and
parties are strictly limited in the size of contributions they
can accept from supporters.
If coordination were allowed, it would mean large,
unregulated contributions--known as ``soft money''--could be
harnessed by a candidate as if they had been given directly to
the campaign. As the Supreme Court wrote in a campaign-finance
ruling last year, ``expenditures made after a `wink or nod'
often will be as useful to the candidate as cash.''

APPEARANCE VS. PROOF

But there's a wide gulf between the appearance of
coordination and proving it in court, where First Amendment
rights to free speech provide wide latitude to political
activists. Besides, Jordan says, there are many legal ways to
make sure friendly political campaigns complement each other.
``There aren't many secrets in Washington,'' he says.
The issue of how much coordination is legal is likely to
grow along with the proliferation of outside groups. As their
numbers multiply, so will the amount of money flowing in to
influence elections for the White House and Congress. That
threatens to blow a hole in the campaign-finance law that bans
unregulated money from being used by parties and candidates,
the law's supporters say.
``The people who are conducting these supposedly
independent campaigns are people who have been intertwined with
Democratic and Republican campaigns for years,'' says Fred
Wertheimer, president of the watchdog group Democracy 21.
Democrats have attracted the most scrutiny because they
have been the most aggressive in setting up channels for
outside money to help Kerry or to attack President Bush. The
network includes more than two dozen outside groups, several of
them created in the past two years to influence the 2004
elections.
Many of the groups have drawn their top personnel from the
AFL-CIO and the Democratic Party. Rosenthal, the labor
federation's former political director, joined Ellen Malcolm,
founder of the fundraising group EMILY's List, to form America
Coming Together. They get public relations help from Jordan and
legal advice from Larry Gold, the AFL-CIO's counsel. That
advice, Gold says, includes an admonition to avoid any
conversations with operatives in the party or the campaign,
even if they are longtime friends.
Harold Ickes, a top campaign and White House adviser to
Bill Clinton, created the Media Fund to advertise on Kerry's
behalf. He is raising money jointly with Malcolm and Rosenthal.
Ickes is a member of the Democratic Party's executive
committee. Ickes' media consultant, Bill Knapp, left the Media
Fund last month to go to work for Kerry.
Pollster John Marttila, who does work for the Brady
Campaign, a gun-control group, and is an adviser to the Kerry
campaign, also made a presentation on May 20 to America Votes,
a forum where pro-Democratic groups coordinate their campaign
activities.
Zack Exley joined the Kerry campaign last month as its
director of online organizing after working in a similar job
for the online organization MoveOn.org, which has aired
millions of dollars in anti-Bush ads. He turned in his laptop
computer when he made the move, but Republican Party Chairman
Ed Gillespie complained that Exley couldn't forget what he had
learned. ``It's virtually impossible for him not to violate the
law unless he has a lobotomy,'' Gillespie says.

REPUBLICANS BUILDING OWN NETWORK

The Republicans could be subject to similar complaints,
particularly as they seek to form their own network of outside
groups.
Last October, Bush's campaign manager, Ken Mehlman, gave a
pep talk to donors of Progress for America, a Republican group
seeking to match the Democratic efforts. Gillespie also was
there. The group was founded by Tony Feather, political
director of Bush's 2000 campaign, and is closely linked to the
DCI Group, a voter-contact firm that has contracts with the
Bush re-election campaign and the Republican Party.
Another group, the Leadership Forum, recently recruited a
stable of 35 well-connected Republicans to raise money to help
Bush. Most of them are Washington lobbyists, and one--former
Senate GOP aide David Hoppe--now runs Gillespie's lobbying
firm.
When the Federal Election Commission decided May 13 not to
regulate outside political groups in this election, senior
Republican leaders sent strong signals that they expected their
party to counter the offensive by Democratic-linked groups.
Gillespie and Bush campaign chairman Marc Racicot issued a
statement designating Progress for America, the Leadership
Forum and two other groups as good places for conservative
soft-money donors to send their checks. The Leadership Forum is
run by Susan Hirschmann, a former chief of staff to House
Majority Leader Tom DeLay of Texas. House Speaker Dennis
Hastert of Illinois and House GOP campaign chairman Tom
Reynolds issued a statement saying ``it would not be
surprising'' if new groups sprang up.
Regulators have long struggled with how to define illegal
coordination and how to enforce prohibitions against it. In the
1980s and 1990s, the Federal Election Commission brought few
enforcement actions over illegal coordination and won fewer.
Coordination, particularly as defined by the courts, became
virtually impossible to prove.
When Congress rewrote campaign-finance law in 2002, it
directed the FEC to write less-permissive regulations. The
result was a rule that covers the dissemination of any
television, radio, mail or telephone message conveyed during a
campaign season by an outside group--if it mentions a federal
candidate, and if its content, timing or targeting has been
shaped by inside knowledge of the candidate's ``projects, needs
and strategies.'' The value of a message coordinated in such a
way becomes an illegal contribution to the campaign.
The next frontier for the Democrats is setting up an
independent arm of the national party to buy TV ads supporting
Kerry and perhaps hire field organizers in key states. The
party is allowed to spend $16.2 million to help Kerry in
coordination with his campaign. But if it creates an operation
that isn't coordinated, it can spend as much money as it can
raise; early estimates run to $25 million or more. The
Republicans are considering a similar arrangement to help Bush.
Ellen Moran is organizing the independent effort from an
office in the Democrats' headquarters. Her resume includes a
stint at EMILY's List, which raises campaign money for
Democratic women who support abortion rights; political work at
the AFL-CIO; and strategy work for the Democratic Party.
Party lawyers have built a legal firewall to avoid
substantive contact between Moran and other party workers. Only
McAuliffe, chief operating officer Josh Wachs and chief
financial officer Brad Marshall are allowed access to the
operation. Other workers at the DNC don't even know Moran's
phone extension. Wachs says, ``The person I talk the most to
every day is Joe Sandler''--the party's lawyer.
But if history is a guide, he doesn't have much to worry
about.
``It is clearly difficult to prove coordination,'' says
Trevor Potter, a former Republican chairman of the FEC. ``It
has always been one of the hardest things to prove under
election law.''

APPENDIX I

----------

[From the Los Angeles Times; Apr. 1, 2004]

Kerry Aided by ``Illegal'' Soft Money, GOP Claims

(By Lisa Getter)

In a complaint to be filed today with the Federal Election
Commission, the Bush campaign and the GOP will charge that Sen.
John F. Kerry is benefiting from ``the largest illegal infusion
of soft money from wealthy individuals, unions, corporations
and other special interests'' since Watergate.
The GOP alleged Wednesday that Kerry, the presumptive
Democratic presidential nominee, was part of an ``unprecedented
illegal conspiracy'' to coordinate ads with well-funded liberal
groups in violation of campaign finance laws--a claim Kerry's
campaign denied.
At issue is the role of several well-funded liberal groups
whose stated goal is to raise $300 million to help oust
President Bush in November. Known as 527s because of the tax
code that governs them, organizations such as the Media Fund
and MoveOn.org have been spending millions of dollars on anti-
Bush TV ads in key battleground states.
In an unusual move, the Bush campaign's national counsel,
Ben Ginsberg, will ask the FEC to immediately dismiss the
complaint without hearing its merits, so Republicans can then
seek relief in federal court.
The Kerry campaign called the complaint frivolous. ``John
Kerry and his campaign have nothing to do with these ads or the
groups that run them,'' said Michael Meehan, Kerry's senior
campaign advisor.
FEC commissioners say they are banned from speaking about
enforcement actions, so it is unclear what the panel will do.
The FEC usually takes at least several months to decide
complaints, which Republicans contend is too long to have any
meaningful effect on this year's presidential election.
The FEC is already in the middle of a lengthy process to
impose new rules that may affect how the 527s raise and spend
their money.
The complaint names six 527s--the Media Fund, America
Coming Together, America Votes, Voices for Working Families,
MoveOn.org and Partnership for America's Families, as well as
some of their wealthy donors. Among the donors are
philanthropist George Soros, who has contributed $5 million;
Hollywood producer Steven Bing, who has given $2 million; and
Cleveland insurance billionaire Peter Lewis, who has donated $3
million.
Campaign finance reform laws have banned such large
donations, which are known as soft money, to political parties.
But the 527s are not governed by the same restrictions; the GOP
says they should be. In their complaint, Republicans contend
that because the 527s appear to be working with the Kerry
campaign, the donations to them are tantamount to illegal soft
money contributions to Kerry.
The Bush campaign has a $108-million cash advantage over
Kerry in collecting so-called hard dollars, according to the
latest financial disclosures. But Republicans worry that the
influx of advertising money from the 527s may close that gap in
a hurry.
From March 3 through Saturday, the Media Fund spent an
estimated $7.3 million and MoveOn.org an additional $3 million
on TV ads attacking Bush, according to TNSMI/Campaign Media
Analysis Group, an independent monitor based in Virginia. Its
figures are derived from analysis of ads on broadcast
television in 100 major markets and on several national cable
outlets.
Kerry, during that same period, spent about $3 million,
according to the ad monitor. That brought the anti-Bush
spending to within range of the Bush campaign, which spent an
estimated $16.9 million.
The spending patterns show the high stakes involved in the
FEC dispute. ``Simply put, the Kerry campaign and the
Democratic Party have been unable to fundraise to a level of
hard dollars that they think is necessary for their campaign
efforts,'' the complaint states. ``Instead, they have chosen to
rely on an illegal conspiracy of donors and shadowy groups to
defeat President Bush.''
``These are vintage Republican intimidation tactics,'' said
Sarah Leonard, a spokeswoman for America Coming Together, the
Media Fund and America Votes. ``As usual, this has nothing to
do with the law, this has nothing to do with the facts, and
everything to do with political desperation.''
Wes Boyd, president of the MoveOn.org Voter Fund, said the
complaint was without merit. ``We do not coordinate with the
Kerry campaign. These charges are baseless and irresponsible,''
he said.
Ginsberg contends that the groups are illegally
coordinating with Kerry because some of the people working with
the 527s have links to the Democratic National Committee or the
candidate's campaign.
Among those he mentions: Harold Ickes, who runs the Media
Fund, also serves on the DNC's executive committee; Jim Jordan,
who also works at the Media Fund, was Kerry's campaign manager
until November; Minyon Moore, a member of America Coming
Together's executive committee, is also a Kerry campaign
consultant; and Bill Richardson, an officer in Voices for
Working Families, is chairman of the Democratic National
Convention.
As proof of coordination, Ginsberg also cited an ad
produced by the Media Fund on Kerry's economic policies that
arrived at television stations before the candidate had made
his plan public. The Media Fund said the ad was based on
information that had already been made public.
Ginsberg also cited a MoveOn.org party in San Francisco
that was attended by Kerry's wife, Teresa Heinz Kerry. The
candidate called the party as she was speaking. The account,
Ginsberg said, was posted on Kerry's campaign website.
But Bob Bauer, a lawyer for America Coming Together, said
Ginsberg was misinterpreting the law. He said there was nothing
in the laws that barred Kerry from socializing with any members
of the 527s. The question is whether Kerry and his campaign are
coordinating their strategy with the independent groups, Bauer
said.
``Coordination occurs when a candidate provides material
information to an organization, the effect of which is to shape
the organization's creation, product or distribution of
advertising,'' he said.
Bauer dismissed Ginsberg's contention that a federal
``former employee rule'' banned Jordan from doing anything for
a 527 unless he ``put his brain on hold and ran the Xerox
machine.''
The 527s say that although some of their staff and
volunteers have links to the Democratic Party and the Kerry
campaign, that is not proof of coordination.

MINORITY VIEWS

The House Administration Committee ordered H.R. 513
reported without recommendation on a 5-3 vote. In our view,
H.R. 513 is a poorly considered response to a problem that is
inadequately identified. It is so broad in its application that
it stands to severely hamper voter registration and get-out-
the-vote activities of civic minded non-partisan organizations.
It casts such a wide net that it will ensnare groups whose
activities Congress should be promoting, not impeding. By
failing to distinguish between groups whose activities are
designed to influence the election of clearly identified
Federal candidates and those whose sole purpose is to enhance
participation, H.R. 513 imposes too high a price on election
activity. This is particularly true in light of the fact that
the candidate advertising that the bill seeks to curb will
continue. The only difference will be that the organizations
that place the ads will transform themselves into organizations
which will be less transparent and accountable than the
committees that they supplant. Voter participation in 2004 was
at its highest level since 1968. H.R. 513 stands to reverse
that gain in voter participation, and for that reason and
others we outline in these views, we cannot support it.

Preface

Congress in the last five years has increased the
regulation of independent political committees organized under
section 527 of the Internal Revenue Code. In 2000, Congress
passed legislation requiring that all 527s that expect to have
gross receipts of over $25,000 during a taxable year, register
with the Internal Revenue Service (IRS) within 24 hours of
their formation, unless they are already reporting to the
Federal Election Commission (FEC). These organizations are
consequently subject to extensive public disclosure and review
requirements. If such an organization seeks to directly
influence Federal elections, it is subject to all the
limitations of the Federal Election Campaign Act (FECA).
In 2002, Congress passed the Bipartisan Campaign Reform Act
(BCRA), which was intended to sever the connection between
Federal officeholders and the raising of unlimited and
unregulated political contributions, often referred to as
``soft money''. Under BCRA, federal officeholders may no longer
solicit or participate in the spending of soft money. BCRA has
been successful in achieving this end. The link has been broken
between Federal candidates and the parties they control, and
the perceived influence of soft money on the creation and
application of Federal policy.
After BCRA was challenged, the Supreme Court upheld the
main provisions of the law, clearly demonstrating that it is
constitutionally permissible to regulate or limit the money
which Federal office holders, Federal candidates, and their
national political parties raise. The Court was hesitant to
endorse the imposition of the same restrictions on independent
political organizations.
The Court addressed independent groups' ability to exercise
their rights under BCRA in 2003 by holding that:

* * * BCRA imposes numerous restrictions on the
fundraising abilities of political parties, of which
the soft-money ban is only the most prominent. Interest
groups, however, remain free to raise soft money to
fund voter registration, GOTV (Get-Out-The-Vote)
activities, mailings, and broadcast advertising (other
than electioneering communications). McConnell v.
Federal Election Commission, 540 U.S. at 80, (bracketed
words added).

The Court even weighed in on those who state that these
independent groups are stronger than the parties:

* * * Interest groups do not select slates of
candidates for elections. Interest groups do not
determine who will serve on legislative committees,
elect congressional leadership, or organize legislative
caucuses. Political parties have influence and power in
the legislature that vastly exceeds that of any
interest group. Id., at 81.

To prevent the circumvention of existing law, in January of
this year, the FEC implemented new rules to ensure that
organizations that raise and spend money expressly to influence
federal elections will be required to register and file reports
with the Commission. Additionally, these organizations must pay
for activity that is intended to influence federal elections
with money under the limitations and prohibitions of the BCRA.
Under the new regulations, funds received in response to a
communication that indicates any portion of the funds will be
used to support or oppose the election of a clearly identified
federal candidate, will be considered contributions to the
person making the communication. The consequence of this is
that any organization whose major purpose of which is to
influence federal elections will be subject to all the
requirements of FECA once it receives over $1,000 during a
calendar year.
Under the new rule, organizations that have established
political committee status will be required to fund their
activities in federal elections with specific percentages of
hard and soft dollars. For example, voter drives that refer to
both federal and nonfederal candidates must be paid with at
least 50% hard dollars. In contrast, public communications that
refer only to federal candidates must be paid for with 100%
hard dollars. Under the FECA, hard dollars must comply with the
source prohibitions, and therefore donations to them would be
limited to $5,000 per individual. Congress should carefully
measure the effectiveness of these regulations before rushing
through a bill which is unlikely to achieve its sponsors'
objectives, but is likely to result in unintended and
undesirable consequences.
Some have accused these independent groups as being mere
``fronts'' for a party. This was the impression given during
the June 29th, 2005 mark-up of H.R. 513, when several former
political party employee pictures were displayed without any
prior notice to the minority side, in what Roll Call newspaper
termed ``mug-shot'' style on the Committee's large screen
monitors. If the independent groups for whom they subsequently
worked are shown to be anything other than independent, these
groups will face substantial penalties from either or both the
Internal Revenue Service or the FEC. If anyone has hard
evidence that office holders have had direct coordination with
527 groups, it should be presented to the appropriate
authorities. The majority party should not impugn the integrity
and honesty of individuals based on raw unfounded speculation.

Principal Flaws

RESTRICTS UNIONS AND INDEPENDENT GROUPS FROM ACTIVITIES WHILE ALLOWING
CORPORATIONS AND TRADE ASSOCIATIONS TO CONTINUE UNREGULATED SPENDING

H.R. 513 imposes further regulation of unions and
independent 527s, and provides an unfair advantage to
corporations and trade associations. This is done by allowing
corporations and trade associations to continue spending
unlimited and undisclosed amounts of money for political
purposes, skewing the playing field in favor of corporations
and trade associations, while labor organizations and
membership groups will be forced to do most of their political
spending as federal political committees, subject to
contribution limitations and source restrictions.

TURNS BACK HIGHEST VOTER PARTICIPATION GAINS OVER LAST 35 YEARS

H.R. 513 would restrict many 527 organizations that played
a critical role in increasing civic participation by
registering, educating, and mobilizing millions of voters for
the 2004 November general election. Voter turnout reached
unprecedented highs as nearly 126 million voters participated
in the 2004 elections. An estimated 15 million additional
voters participated in the 2004 election over the November,
2000 election. Many were previously unregistered or disengaged,
and they have now reengaged in the political process. Congress
should be encouraging and supporting this kind of increase in
voter participation, rather than obstructing it.

VIOLATES 1ST AMENDMENT AND FORCES GROUPS TO MORPH INTO LESS ACCOUNTABLE
FORMS

H.R. 513 is unduly vague and stands to chill speech not
directed at any election. Speech criticizing an officeholder's
position on an issue a year before an election may trigger
regulation. Once regulation is triggered, an organization will
have all its activities limited by the prohibitions and
limitations that are intended only to apply to political
committees seeking to influence federal elections. It is
unclear how an organization will be able to free itself from
these limitations on its speech.
One choice may be for such an organization to forego 527
status from the start. If operating as a 527 organization
limits an organization's ability to publicly debate issues of
importance, then an organization simply may choose a different
operating structure and avoid regulation altogether. H.R. 513
will then have accomplished nothing other than to ensnare the
unwary, while driving the election activity which it intends to
regulate into unregulated channels.

Conclusion

We have attached letters from concerned groups on the
impact this legislation may have on their civic activities. We
have also included several charts which show the increase in
voter turnout between 1996-2004, an increase attributable in
large measure to the efforts of 527 organizations in
registering and mobilizing voters. Because we are doubtful that
H.R. 513 has any chance to achieve its objectives, and because
we believe that it will have a negative impact on voter
participation, we opposed the bill in committee and expect to
oppose it on the Floor.
Juanita Millender-McDonald.
Robert A. Brady.
Zoe Lofgren.