Follow the Money (Part I)

There is a lot of activity in the 109th Congress on the subject of campaign finance reform. Frequently a hot topic inside the beltway, regulations of campaign activity impact Members of Congress very directly, so it is interesting to watch the policy positioning of both individual members and the Parties when legislative action is considered. When it comes to post-BCRA campaign regulations, it is not only the jobs of elected officials at stake, but also the risk that they will do jail time if found to be operating outside the web of regulation.

I will focus on the House here, because that has been the hotbed of recent Committee activity, but first a little background. In 2001, BCRA gained enough Republican backers to force floor action and was subsequently passed by the Congress and signed into law. The Supreme Court upheld most of BCRA, citing the opportunity for corruption or appearance thereof as justification for the limitation of free expression.

By staying within the letter of the existing law and falling outside of the Court's restrictions by virtue of their independence, 527 organizations proliferated in the 2004 election cycle. The key to the successful operation of 527 organizations is their ability to solicit and receive unlimited soft money donations.

The success of 527s has spawned two legislative approaches. The first approach, Pence-Wynn, seeks force disclosure regulations onto 527s. It would otherwise leave these organizations free to operate as they have in the past. It also seeks to level the playing field, by upping the aggregate limits for giving to political parties.

The second approach is forwarded by the original House co-sponsors of BCRA, Chris Shays and Marty Meehan, and seeks to subject the 527s to the giving limits and quarterly disclosure requirements that BCRA applies to federal candidates and political parties.

Both of these approaches have been separately passed out of Committee, and are now in line for floor consideration. They should be followed closely by political professionals for several reasons.
527s are huge business, and their existence in current form impacted all aspects of the 2004 Presidential campaign, specifically as it applied to synergy and GOTV efforts on the Democratic side.

If 527s are subjected to donation limitations, the business model changes. Born truly in the new media era, 527s have made great use of internet fundraising and messaging. Without the ability to get deep into the wallets of George Soros and Alex Spanos, the 527s will be forced to troll for smaller donations, and the internet is prime territory for such trolling.

Additionally, limiting soft money would empower smaller 527 organizations to compete with the larger 527 organizations whose lifeblood was soft money. The result would be a more diverse set of specific interests, organized as 527s, competing for donors and primacy.