Why FEC is wrong on soft money groups

SUPPOSE the Federal Election Commission has got it wrong and is misinterpreting the law in allowing so-called "527 groups" to spend unlimited soft money on ads and other activities to influence the 2004 presidential election. Such a failure by the FEC would involve very serious consequences.

It would mean that tens of millions of dollars in soft money contributions, some as high as $10 million or more, had been used illegally in the 2004 federal elections. It would also mean that some of the most negative and unaccountable political advertising in the presidential election had been funded by 527 groups with illegal money.

Most important, it would mean in the event of a close election that illegal soft money could well have played a decisive role in choosing our next president.

And in terms of the public, it would mean that the media had repeatedly communicated an erroneous message to voters all year in describing the activities of 527 groups as legal, or as a "legal loophole."

This leads to two questions.

First, how credible is the Federal Election Commission, the agency that the media and others have relied on for the proposition that 527 groups are operating legally in the 2004 elections.

The answer is plain: The FEC has no credibility, particularly when it comes to "interpreting" the law as it applies to soft money.

The US Supreme Court made this clear last year when it strongly admonished the FEC in upholding the constitutionality of the McCain-Feingold law banning soft money.

In the McConnell case, the Supreme Court placed the blame for the creation of the soft money problems of the 1980s and 1990s squarely at the feet of the FEC. The court said the nation's campaign finance laws were "subverted" by the FEC's regulations, which allowed the parties "to use vast amounts of soft money in their efforts to elect federal candidates." The court stated that the regulations had "invited widespread circumvention" of the law and "permitted more than Congress . . . had ever intended."

On Sept. 18, 2004, the courts issued another stinging rebuke of the FEC when a federal district judge threw out 15 regulations the agency had adopted to carry out the new soft money ban.

In what may be an unprecedented rejection of a government agency's regulations, Judge Colleen Kollar-Kotelly found that the FEC had repeatedly misinterpreted the new law banning soft money.

The judge found, for example, that one regulation "runs completely afoul" of basic campaign finance law, another would "foster corruption," another "would render the statute largely meaningless" and another "creates the potential for gross abuse."

Given this track record, there's simply no basis to rely on FEC pronouncements when it comes to campaign finance laws and their application to soft money.

This leads to the second question: Do the soft-money-funded activities by 527 groups involve a "legal loophole" or violations of law?

The answer to this question is also plain: The 527 groups are violating the law, courtesy of the FEC's refusal to issue regulations to stop them.

Longstanding federal campaign finance laws and binding Supreme Court decisions establish that a group whose "major purpose" is to influence federal elections, and that spends more than $1,000 to do so, must register as a federal political committee and comply with federal limits on the contributions they receive.

There is no question that leading 527 groups, like The Media Fund and Swift Boat Veterans for Truth, have as their "major purpose" -- indeed, their overriding purpose -- the influencing of federal elections. There's also no doubt that they are spending more than $1,000 on those efforts.

The incorrect claims by 527 groups that they're not spending any money to influence federal elections because their ads attacking federal candidates do not contain words of "express advocacy" were put to rest by McConnell. The Supreme Court affirmed in McConnell that the "express advocacy" standard did not exempt from campaign laws groups like 527s that are "organized for the express purpose of engaging in partisan political activity." Despite this, a majority of FEC commissioners have refused to take any action to implement the McConnell decision and require 527s to comply with the law, overriding the recommendations of their own general counsel in the process.

So once again we are back in the courts. The congressional sponsors of the new law -- and President Bush and his campaign -- recently filed similar lawsuits against the FEC for failing to stop the illegal use of soft money by 527 groups. As baseball legend Yogi Berra famously said, "It's deja vu all over again." The consequences of the FEC misinterpreting the campaign laws will not be clear until the election is over and the courts again speak.

However, one thing is clear right now. The FEC has made the irrefutable case that it needs to be replaced with a real enforcement agency.

Fred Wertheimer is president of Democracy 21, a nonprofit organization working to eliminate the influence of big money in American politics.