U.S. ELECTIONS | Guide to the 2008 Election
03 April 2008
“527” Committees Spend Millions on Political Discourse
Issues-advocacy approach exempts them from limits on campaign funding
Washington -- No, “527” isn’t the winning lottery number of the day -- though it might seem that way to some politicians.
The number refers to a section of the U.S. Tax Code that governs a controversial method of financing political campaigns. It covers a category of tax-exempt political committees that avoid the limits on campaign financing imposed by the Bipartisan Campaign Reform Act of 2001 by steering clear of directly supporting or opposing candidates for office.
These committees can have essentially the same impact by supporting or opposing the policy positions those candidates hold. They disseminate those views through a massive array of television and radio ads, mailings and phone calls to voters.
A key restriction placed on such groups is that they cannot directly coordinate their activities with political parties. But the 527s seem to manage to serve the interest of overtly partisan groups despite that restriction.
One of the best-known 527s in the 2004 election cycle was the Swift Boat Veterans for Truth (later renamed Swift Vets and POWs for Truth). The group focused on questioning the military record of Senator John Kerry, the Democratic candidate for president, and the patriotism of his later criticisms of the Vietnam War in which he had served. Those attacks are considered a factor in Kerry’s loss to his Republican opponent, President George W. Bush.
That group’s activities led to the entry of the term “swiftboating” into the American political lexicon, as a pejorative describing unfair smear attacks.
FUNDS SUPPORT LIBERAL AND CONSERVATIVE CAUSES
The “527” committees exist on both sides of the political debate in the United States. Such groups have raised far more money for causes considered liberal than for those labeled conservative and, therefore, indirectly for the candidates who espouse them.
Data compiled by the nonpartisan Center for Responsive Politics show that in the 2004 election cycle -- covering 2003 and 2004 -- 527s raised more than $599.2 million, and logged expenditures of $611.7 million. Even in the 2006 cycle, without the spur of a presidential election, they raised $384.7 million, and spent $429.2 million.
Records released in February 2008 by the Internal Revenue Service show that wealthy individuals across the political spectrum give lavishly to 527s.
Bob Perry, head of a Houston homebuilding company and supporter of President Bush, led the list of contributors, with a total of $9.8 million. Perry had donated about $4.5 million to Swift Vets alone in the prior 2004 cycle.
His 2006 contributions included $5 million to the Economic Freedom Fund, which says its aim is to “educate the public concerning issues related to the preservation of economic freedom, the promotion of economic growth and prosperity for the people of the United States of America.” He gave another $3 million to Americans for Honesty on Issues which, by mid-October, had spent more than $1 million on television ads critical of Democratic candidates in the 2006 elections.
In second place, Jerry Perenchio, chairman of the Chartwell Partners investment firm, serves as co-finance director of Senator John McCain’s 2008 presidential campaign. Perenchio contributed $5 million to Progress for America Voter Fund, a group that focuses on issue-advocacy ads supporting Bush administration policies and Republican candidates.
A staunch liberal comes in third on the list of 527 committee contributors. Investor George Soros, chairman of Soros Fund Management, spent $3.5 million, including $2.7 million to America Votes, a Democratic voter mobilization effort that describes itself as “marshalling and uniting the voices, efforts and resources of the most powerful progressive organizations in the country.”
Who are the biggest recipients of 527 largesse? The top five in 2006, according to IRS data:
• The Democratic-oriented Service Employees International Union at $25.1 million;
• America Votes, $14.4 million;
• EMILY’s List, which says it “helps pro-choice Democratic women run and win for federal, state and local office,” $11.8 million; and
• The Club for Growth, with its focus on advancing Republican economic views, $7.2 million, and Progress for America, Perenchio’s favorite, $6.2 million.
OpenSecrets.org, the Web site of the Center for Responsive Politics, explains that notwithstanding the variety of positions that 527s represent, “they have one thing in common: they influence how you look at the candidates.”
The “issue advocacy” that is their stock in trade “won’t explicitly tell you to elect or defeat a particular candidate, but the advocacy group’s view of the candidate’s stance on their issue is clear,” the Web site states.
Given the murky line between issue advocacy and candidate endorsement, there has been heated debate, and sometimes litigation, as to the legality of some 527s’ activities. Although the Federal Election Commission (FEC) has left key regulatory questions unanswered and pursued enforcement action only slowly, complaints of illegal coordination between 527s and political campaigns have prompted the agency to take punitive action in some cases.
The FEC entered into settlements in 2006 and 2007 with four groups charged with violating federal campaign financing laws during the 2004 election cycle. The Progress for America Voter Fund was fined $750,000; Swift Boat Veterans for Truth, $299,500, the pro-environment League of Conservation Voters, $180,000; and the Democratic-oriented MoveOn.org, $150,000.
As legal issues regarding the role of the 527 committees continue largely unresolved, the groups will continue to funnel millions of dollars into political discourse as the 2008 elections approach.
