The 527 Page 2008 Edition
Center for Responsive Politics
IRS-Political Organization Disclosure(Form 8872's)

527s Have Less Impact in 2008

BCRA stemmed the flow of soft money to the parties, but the large soft money contributions quickly found a new channel in the so called "Section 527" political organizations.  527s, named after a section of the tax code, can engage in voter mobilization efforts, issue advocacy and other activity short of expressly advocating the election or defeat of a federal candidate.  There are no limits to how much they can raise. 

In Spring 2004 liberal groups such as America Coming Together (ACT) ("mobilizing voters to defeat George W. Bush"), The Media Fund ("media buying organization supporting a progressive message and defending Democrats from attack ads") and Voter Fund, drawing backing from billionaire George Soros and others (example), engaged in a major campaign that paralleled that of the presumptive Democratic nominee Sen. John Kerry.  Republicans protested.  When on May 13, 2004 the FEC voted to delay a decision on regulating 527 committees, Republicans vowed to vigorously pursue their own 527 efforts.  In a joint statement, Bush-Cheney campaign chairman Marc Racicot and RNC chairman Ed Gillespie said the decision "sets the stage for a total meltdown of federal campaign finance regulation in 2004."  "The 2004 elections will now be a free-for-all," the two said in their statement.  "Conservative groups now have the go-ahead they were waiting for as the commission has now made clear that these '527' groups will not be affected by the federal campaign finance rules, at least in 2004."  Indeed in the the closing months of the campaign Republican aligned groups such as Progress for America Voter Fund and Swift Boat Veterans for Truth weighed in with significant advertising campaigns. 

And so the money flowed.  According to the Center for Public Integrity, 53 committees that focused "largely or exclusively on the presidential election" raised $246 million in the 2003-2004 cycle.  All told "527 committees raised and spent just over a half-billion dollars during the 2003-2004 election cycle." (Center for Public Integrity.  "527s in 2004 Shatter Previous Records for Political Fundraising."  Dec. 16, 2004.)

Two years after the election had concluded, on Dec.13, 2006, the FEC announced that it had reached settlements with three of 527s (two LCV 527s, Voter Fund, and Swiftboat Veterans) to pay penalties totaling about $630,000 for violating the Federal Election Campaign Act.  And, on Aug. 29, 2007, the FEC announced that America Coming Together had agreed to pay a $775,000 civil penalty ("third largest civil penalty in an enforcement matter in the Commission’s thirty-three year history.")

In the 2008 cycle 527s did not have as visible an impact as in 2004.  In the Fall, the Obama campaign pursued voter registration in house with its Campaign for Change organizations in the states, whereas in 2004 America Coming Together had done a lot of that work on the Democratic side.  There were some incendiary ads, but nothing as significant as the Swift Boat Veterans.  The Center for Responsive Politics reported that total 527 receipts and expenses (not limited to presidential-related) were down in 2008 compared to 2004 (receipts fell from 599.2 million to 503.2 million and expenses from 611.7 million to 487.9 million).

Questions of Interpretation

Ultimately, BCRA's effectiveness depends upon the Federal Election Commission's regulations, arrived at through an extensive rulemaking processLegal challenges started immediately.  In a complaint filed on Oct. 8, 2002 and amended on Jan. 21, 2003, Reps. Christopher Shays and Martin Meehan charged that the FEC's regulations "thwart and undermine the language and congressional purposes of Titles I and II of BCRA."  Bush-Cheney '04, Inc. also filed a similar lawsuit against the FEC on Sept. 17, 2004.  In a ruling signed March 29, 2006 U.S. District Judge Emmet G. Sullivan found that "the FEC has failed to present a reasoned explanation for its decision that 527 organizations will be more effectively regulated through case-by-case adjudication rather than general rule."  He sent the matter back to the FEC "to explain its decision or institute a new rulemaking."  [FEC, overview]  On May 31, 2006 the FEC announced its intention "to prepare a more thorough explanation of the rulemaking decisions at issue" rather than go through a new rulemaking. 

The 109th Congress considered reforms to the rules governing Section 527 organizations, but nothing passed.  On April 5, 2006 the House passed the "527 Reform Act of 2005" sponsored by Reps. Christopher Shays (R-CT) and Martin Meehan (D-MA), by a vote of 218-209.  The bill would "require 527s to register as political committees with the Federal Elections Commission (FEC); set minimum allocation formulas for political committees which have both a federal and non-federal account; and limit contributions to non-federal (soft money) accounts of political committees to a $25,000 annual contribution per donor."  In the Senate, Sen. John McCain (R-AZ) introduced the "527 Reform Act of 2005," S.271, which would amend the Federal Election Campaign Act of 1971 to clarify when Section 527 groups must register as political committees.  The Committee on Rules and Administration held a hearing on S.271 on March 8, 2005.  However, changes made during the Committee markup on April 27 prompted Sen. Chuck Schumer (D-NY), a leading co-sponsor, to withdraw his support.

2004 Edition
Copyright © 2008. 2009  Eric M. Appleman/Democracy in Action