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Jim Babka on
McCain-Feingold
Dear friends,
McCain-Feingold is so bad that even the liberals who worked
for its passage are screaming foul. One of those groups is
MoveOn.
MoveOn.org has written one of the best illustrations of how
proposed FEC enforcement of the Bipartisan Campaign Reform
Act of 2002 (BCRA, aka McCain-Feingold) is likely to go.
They're alarmed, up-in-arms (and they should be). I want to
share their excellent report with you, but not without
reminding you that this is exactly what we said would
happen.
The FEC has a comment period going and MoveOn is trying to
get their supporters riled up to help them tame this
monster - a monster they created. They've even re-written a
little bit of history in the process. Still, the damaging
effects they've listed are spot on. This document is very
powerful.
I'll have a great deal more to say about this in tomorrow's
message. For now, I encourage you to read this piece by
MoveOn.org. And remember, we told you so.
Jim Babka
President
RealCampaignReform.org
(soon to be Downsize DC)
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EXAMPLES OF SPECIFIC CONSEQUENCES FOR NONPROFIT GROUPS
by MoveOn.org
Under the proposed rules, nonprofit organizations that
advocate for cancer research, gun and abortion restrictions
or rights, fiscal discipline, tax reform, poverty issues,
immigration reform, the environment, or civil rights or
liberties - all these organizations could be transformed
into political committees if they criticize or commend
members of Congress or the President based on their
official actions or policy positions.
Such changes would cripple the ability of groups to raise
and spend funds in pursuit of their mission and could be so
ruinous that organizations would be forced to back away
from meaningful conversations about public policies that
affect millions of Americans.
If the proposed rules were adopted, the following
organizations would be treated as federal political
committees and therefore could not receive grants from any
corporation, even an incorporated nonprofit foundation,
from any union, or from any individual in excess of $5,000
per year:
- A 501(c)(4) gun rights organization that spends $50,000
on ads at any time during this election year criticizing
any legislator, who also happens to be a federal candidate,
for his or her position on gun control measures.
- A "good government" organization [501(c)(3)] that spends
more than $50,000 to research and publish a report
criticizing several members of the House of Representatives
for taking an all-expense trip to the Bahamas as guests of
the hotel industry.
- A fund [527] created by a tax reform organization to
provide information to the public regarding federal
candidates' voting records on budget issues.
- A civil rights organization [501(c)(3) or 501(c)(4)] that
spends more than $50,000 to conduct non-partisan voter
registration activities in Hispanic and African-American
communities after July 5, 2004.
- An organization devoted to the environment that spends
more than $50,000 on communications opposing oil drilling
in the Arctic and identifying specific Members of Congress
as supporters of the legislation, if those Members are
running for re-election.
- A civic organization [501(c)(6)] that spends $50,000
during 2004 to send letters to all registered voters in the
community urging them to vote on November 2, 2004 because
"it is your civic duty."
Other potential ramifications include the following
situations:
- A religious organization that publishes an election-year
legislative report card covering all members of Congress on
a broad range of issues would be unable to accept more than
$5,000 from any individual donor if the report indicated
whether specific votes were good or bad.
- A 501(c)(3) organization that primarily encourages voter
registration and voting among young people will be required
to re-create itself as a federal PAC.
- A 501(c)(4) pro-life group that accepts contributions
from local businesses would break the law by using its
general funds to pay for any communications critical of an
incumbent Senator's position on abortion rights after the
Senator had officially declared himself for reelection more
than a year before the next election.
- A 501(c)(3) civil rights group that has been designated
as a political committee can no longer hold its annual
fundraiser at a corporate-donated facility, and it must
refuse donations or grants from donors that have already
given $5,000 for that year.
BRIEFING ON THE PROPOSED RULE CHANGES
Under federal campaign finance laws, federal "political
committees" must register and file reports with the FEC and
can accept contributions only from individual persons (and
other federal committees), and only up to $5,000 per year
from any one donor ("hard money"). The FEC is now proposing
to redefine "political committee" to include any group
that:
1. Spends more than $1,000 this year on nonpartisan voter
registration or get out the vote activity or on any ad,
mailing or phone bank that "promotes, supports, attacks or
opposes" any federal candidate; and
2. Supposedly has a "major purpose" of election of a
federal candidate as shown by:
(a) Saying anything in its press releases, materials,
website, etc. that might lead regulators to conclude that
the group's "major purpose" is to influence the election of
any federal candidate; or
(b) Spending more than $50,000 this year or in any of the
last 4 years for any nonpartisan voter registration or get
out the vote program, or on any public communication that
"promotes, supports, attacks or opposes" any federal
candidate.
What's more, any group that gets turned into a federal
"political committee" under these new rules has to shut
down all its communications critical of President Bush (or
any other federal candidate) until it sets up "federal" and
"non-federal" accounts; and raises enough hard money
contributions to "repay" the federal account for the
amounts spent on all those communications since the
beginning of 2003.
These proposed rules would apply to all types of groups:
501(c)(3) charitable organizations, 501(c)(4) advocacy
organizations, labor unions, trade associations and non-
federal political committees and organizations (so-called
"527" groups, as well as state PACs, local political clubs,
etc.).
The new rules, including those that apply to voter
engagement, cover all types of communications -- not just
broadcast TV or radio ads -- but messages in any form, such
as print ads, mailings, phone banks, email alerts like this
one, websites, leaflets, speeches, posters, tabling, even
knocking on doors.
The FEC will hold a public hearing on April 14 & 15.
Written comments are due by April 5 if the group wants to
testify at that hearing; otherwise, by April
9. The FEC plans to make its final decision on these
proposed rules by mid-May and they could go into effect as
early as July, right in the middle of the election year,
potentially retroactive to January 2003.
It's clear that these rules would immediately silence
thousands of groups, of all types, who have raised
questions and criticisms of any kind about the Bush
Administration, its record and its policies.
SOME TALKING POINTS
- The FEC should not change the rules for nonprofit
advocacy in the middle of an election year, especially in
ways that Congress already considered and rejected.
Implementing these changes now would go far beyond what
Congress decided and the Supreme Court upheld.
- These rules would shut down the legitimate activities of
nonprofit organizations of all kinds that the FEC has no
authority at all to regulate.
- Nothing in the McCain-Feingold campaign reform law or the
Supreme Court's decision upholding it provides any basis
for these rules. That law is only about banning federal
candidates from using unregulated contributions ("soft
money"), and banning political parties from doing so,
because of their close relationship to those candidates.
It's clear that, with one exception relating to running
broadcast ads close to an election, the new law wasn't
supposed to change what independent nonprofit interest
groups can do, including political organizations (527's)
that have never before been subject to regulation by the
FEC.
- The FEC can't fix the problems with these proposed rules
just by imposing new burdens on section 527 groups. They do
important issue education and advocacy as well as voter
mobilization. And Congress clearly decided to require those
groups to fully and publicly disclose their finances,
through the IRS and state agencies, not to restrict their
independent activities and speech. The FEC has no authority
to go further.
- In the McConnell opinion upholding McCain-Feingold, the
U.S. Supreme Court clearly stated that the law's limits on
unregulated corporate, union and large individual
contributions apply to political parties and not interest
groups. Congress specifically considered regulating 527
organization three times in the
last several years - twice through the Internal Revenue
Code and once during the BCRA debate - and did not subject
them to McCain-Feingold.
- The FEC should not, in a few weeks, tear up the fabric of
tax-exempt law that has existed for decades and under which
thousands of nonprofit groups have structured their
activities and their governance. The Internal Revenue Code
already prohibits 501(c)(3) charities from intervening in
political candidate campaigns, and IRS rules for other
501(c) groups prohibit them from ever having a primary
purpose to influence any candidate elections -- federal,
state, or local.
- As an example of how seriously the new FEC rules
contradict the IRS political and lobbying rules for
nonprofits, consider this: Under the 1976 public charity
lobbying law, a 501(c)(3) group with a $1.5 million annual
budget can spend $56,250 on grassroots lobbying, including
criticism of a federal incumbent candidate in the course of
lobbying on a specific bill. That same action under the new
FEC rules would cause the charity to be regulated as a
federal political committee, with devastating impact on its
finances and perhaps even loss of its tax-exempt status.
- The chilling effect of the proposed rules on free speech
cannot be overstated. Merely expressing an opinion about an
officeholder's policies could turn a nonprofit group
OVERNIGHT into a federally regulated political committee
with crippling fund-raising restrictions.
- Under the most draconian proposal, the FEC would "look
back" at a nonprofit group's activities over the past four
years - before McCain-Feingold was ever passed and the FEC
ever proposed these rules - to determine whether a group's
activities qualify it as a federal political committee. If
so, the FEC would require a group to raise hard money to
repay prior expenses that are now subject to the new rules.
Further work would be halted until debts to the "old"
organization were repaid. This rule would jeopardize the
survival of many groups.
- The 4 year "look back" rule would cause a nonprofit group
that criticized or praised the policies of Bush, Cheney,
McCain, or Gore in 2000, or any Congressional incumbent
candidate in 2000 or 2002, to be classified as a political
committee now, even though the group has not done so since
then. This severely violates our constitutional guarantees
of due process.
- These changes would impoverish political debate and could
act as a de facto "gag rule" on public policy advocacy.
They would insulate public officials from substantive
criticism for their positions on policy issues. They would
actually diminish civic participation in government rather
than strengthen it. This would be exactly the opposite
result intended by most supporters of campaign finance
reform.
- The FEC's proposed rule changes would dramatically impair
vigorous debate about important national issues. It would
hurt nonprofit groups across the political spectrum and
restrict First Amendment freedoms in ways that are
unhealthy for our democracy.
- Any kind of nonprofit -- conservative, liberal, labor,
religious, secular, social service, charitable,
educational, civic participation, issue-oriented, large,
and small -- could be affected by these rules. A vast
number would be essentially silenced on the issues that
define them, whether they are organized as 501(c)(3),
501(c)(4), or 527 organizations.
- Already, more than five hundred nonprofit organizations -
including many that supported McCain-Feingold like
ourselves - have voiced their opposition to the FEC's
efforts to restrict advocacy in the name of campaign
finance reform.
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