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No one's clean on election cash

As the election drew closer, outside groups run by some of the party's canniest political operatives pumped millions of dollars into key races. Newly formed and with innocuous-sounding names, they ran slashing attack ads. Party leaders on the other side cried foul, complaining of a "total meltdown of federal campaign finance regulation."

Sound familiar?

This was 2004. The outside groups were organized by such Democratic strategists as Harold Ickes and Ellen Malcolm; they were funded by labor unions and wealthy donors writing seven-figure checks. In the end, nearly three years later, the groups agreed to pay fines totaling $1.3 million -- to settle charges that they had illegally spent more than $150 million to influence the election.

So forgive me if I take the current Democratic howls of outrage with a hefty helping of cynicism.

Not that the Republican-linked spending isn't outrageous. In fact, it's way worse than the Democrats' 2004 avalanche of outside money because so much is being conducted under a cloak of secrecy.

Let's not be naive, though. Unlike most Republicans, Democrats have long supported campaign finance reform; for that they deserve enormous credit. But campaign cash is where the hardball hits the mitt. For decades, both parties and their allies have demonstrated a hardheaded willingness to exploit and stretch existing campaign finance laws. To expect otherwise is to expect lions not to eat zebras when the opportunity arises. The ethics -- and the expressions of ethical outrage -- are purely situational.

Democrats are not playing the outside group game this election -- but it would be awkward to do so while blasting Republicans. As a presidential candidate in 2008, Barack Obama discouraged the formation of outside groups -- but his fundraising juggernaut meant he didn't need them.

The real villains of the current mess are a tax code that gives way too much leeway for secret and unlimited political cash and a regulatory regime that has proved itself incapable of stemming the flow.

In 2004, Democratic groups disclosed their donors -- not because they are purer of heart but because the law required it. The Democrats chose to set up the groups as what are known as 527s -- political committees required to report receipts and expenditures to the Internal Revenue Service.

The Republican-linked groups are operating under different sections of the tax code that don't mandate such disclosure. The U.S. Chamber of Commerce, for example, is a trade association, known as a 501(c)(6). Crossroads GPS, the group backed by Karl Rove and Ed Gillespie, is a nonprofit advocacy organization, known as a 501(c)(4).

Are they stretching the limit of what the law allows? Especially in the case of the nonprofits, I'd argue yes. We'll find out -- eventually. The Campaign Legal Center and Democracy 21, the reform groups that brought the 2004 complaints against the Democrats' outside groups, have asked the IRS to investigate Crossroads GPS.

Under federal tax law, 501(c)(4)s and 501(c)(6)s cannot "primarily engage" in activities that constitute "participation or intervention in political campaigns." Under federal election law, political committees -- groups whose "major purpose" is to influence elections and that run ads that cannot be understood as anything but advocating the election or defeat of federal candidates -- must comply with reporting requirements.

The IRS has failed to effectively police the porous boundaries. Marcus Owens, who headed the IRS branch that oversaw nonprofit organizations, points out that the newly sprouted nonprofits won't even have to file reports with the IRS until January 2012. "It's a farce," he told The New York Times.

Meanwhile, the Federal Election Commission has proved itself institutionally incapable of responding. In case after case involving the political activities of nonprofits, the agency has deadlocked, with its three Republican commissioners blocking investigations.

The obvious solution isn't to rely on the kindness of political operatives. It's to strengthen the law to require groups clearly engaged in the election-influencing business to say where their money is coming from -- as the Disclose Act that Republicans now oppose would do.

As one senior lawmaker said in 2000, when Congress was tightening the rules for 527s, "what we ought to do is broaden the disclosure to include at least labor unions and tax-exempt business associations and trial lawyers so that you include the major political players in America. Why would a little disclosure be better than a lot of disclosure?"

That was Mitch McConnell, now Senate minority leader. He was right then, even if he disagrees with himself now. As I said, it's all situational.

By Ruth Marcus  | October 14, 2010; 5:49 PM ET
Categories:  Marcus  | Tags:  Ruth Marcus  
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Ruth, but what about the other democratic groups, like the Center for American Progress. It doesn't disclose donors does it So, don't pretend Democratic groups have disclosed and Republicans aren't disclosing. It seems when Republicans start playing by Democratic rules, then you all start howling?

Posted by: termiteavenger | October 15, 2010 1:59 AM | Report abuse

And Ruth, if the Disclose Act you mention is the one that Schumer has proposed, the Republicans aren't supporting it because doesn't it exempt the labor unions and other democratic supporters? It isn't a serious bill at all.

Posted by: termiteavenger | October 15, 2010 2:50 AM | Report abuse

And Ruth, if the Disclose Act you mention is the one that Schumer has proposed, the Republicans aren't supporting it because doesn't it exempt the labor unions and other democratic supporters? It isn't a serious bill at all.

Posted by: termiteavenger
PAC money is Voluntarily Donated only by Union Members, It's the Law, and Union Members are known!
No Wives, kids, fathers, mothers or anyone else is allowed! NOT all Union Members donate!

The money is deducted from their pay checks by their employer. The employer knows who donates and how much! Employers want it that way!!

Other personal Political Activities are Voluntary and paid for by themselves.

Posted by: ddoiron1 | October 15, 2010 10:30 AM | Report abuse

The problem isn't the money funneling in - it is that the politicians can be bought. Eliminate the need for money and you eliminate the corruption. How? Not by public financing. That just exchanges private influencers with a public bureaucrat who is going to be influenced.

The real answer is to make money unnecessary. How? Reduce the size of legislative districts. Districts on a federal and state level that are 3-5000 won't require vast sums for campaigns; the rich won't be able to buy seats. Ideas will win; public service will win.

Yes, legislatures and Congress will be much larger. Not a problem with the Internet - they can vote, attend hearings, communicate in real time - just like the private sector does now.

Yes, the legislatures will be part time and unpaid positions. No salaries, no pensions, no staff. True public service not influenced by money - just civic duty.

Can't work? Look at New Hampshire. 400 members of its House - they get paid $100 per year, no staff, no offices. They hold town meetings and knock on doors to get elected. Never a shortage of candidates either and they don't stay forever so no term limits necessary.

Once state legislatures are cleaned out of the corrupt, return statewide elections to the state legislatures so we don't have multimillion dollar senate and governor races. Similar to a parliamentary system where legislatures appoint execs.

We are being led down the wrong path by a career political class funded by special interests, business and unions. Get rid of the need for money and you solve the problem.

John Cox

Posted by: jcox998 | October 15, 2010 12:03 PM | Report abuse

Republicans...blah, blah, money.

Democrats.....blah, blah, money.

The President, in his continuing attack on business, accusing a group of citizens of committing crime with NO evidence.... No comment.

Posted by: TECWRITE | October 15, 2010 12:04 PM | Report abuse

to all,

what UTTER HYPOCRITES that the DIMocRAT "leadership" IS!

SEIU & any number of other labor union & LEFTIST groups are soliciting $$$$$$$$$$ from OVERSEAS donors & at the same time screaming about the Chamber of Commerce & other groups SUPPOSEDLY (there is NO evidence of the CofC doing anything of the kind & BHO & the DIMocRATS frequently LIE!) doing EXACTLY the SAME THING.

do the DIMocRATS/LEFTISTS/"progressives" think that we "regular people" are STUPID? = the answer that question is: YES!

but we "workers", "regular people", "rank & file union members", etc. are NOT fooled.=====> we KNOW that BHO, Princess Pelosi, Prince Harry Reid, BIGMOUTH Chuckie Schumer & MANY other similar politicians are LIARS, BIGOTS, SCUM & FILTH and therefore we "regular folks" are about to throw them OUT on their ears & convert BHO to AMERICA'S LAMEST DUCK until he leaves office on 01-20-2013.

JUDGEMENT DAY is 11/02/10 & we "ignorant boobs from flyover country" (THANKS to Princess Pelosi for that description! = Princess, you've been one of our TEA PARTY group's BEST recruiters.) will get "our pound of flesh" from the DIMocRATS/LIBs/SOCIALISTS that day & on every other election to follow.
(sorry, DIMs, we TEA PARTIERS are NOT going to fade away, but you ARE!)

yours, TN46
coordinator, CCTPP

Posted by: texasnative46 | October 15, 2010 12:18 PM | Report abuse

Oh're telling me that Mitch McConnell will say anything and take any position as long as it benefits his paymasters? I forgot he was the one who took McCain-Feingold to the courthouse. He's a shill, has always been a shill and has no value whatsoever beyond his highly-developed shilldom.

Posted by: JustTheFacts11 | October 15, 2010 12:34 PM | Report abuse

Well, Ruth, now the Republicans figure you've just given them cover by equating what's happening. There is no balance here. It's far worse on the Republican side. They are trying to buy the election with far more money than we've ever seen and no one knows where it's coming from. part of it may be coming from other countries.
The liberal press always ends up giving cover to the Republicans. You never see the conservative press give cover to liberals.

Posted by: guyachs | October 15, 2010 1:06 PM | Report abuse

Let us ignore the candidates for awhile and accept one financial fact.
The media's main sources for ad revenues come from the elections and referenda.When people argue about imported oil they make reference to OPEC instead of the largest supplier,Canada.
When people get upset about funding elections they get upset with corporations or interest groups.Who are these vested interest groups paying? Correct,the media outlets who have far more to gain by saying some candidate is behind or short of money to pay for more ads for their hungry reporters.

Posted by: TarheelChief | October 15, 2010 2:35 PM | Report abuse

I guess my thoughts are the same as before. Individuals need to be careful about the goods they buy. Consumers now need to consider the politics of a company's owners as well as the politics of the company when deciding who to buy goods from.

Posted by: ideallydc | October 15, 2010 4:36 PM | Report abuse

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