Now we’re talking! Hectic campaign pace got you down? Your opponent seems to be right on too many issues? Buy some advertising time! It is the elixir to cure any ailing campaign. Whether a candidate is introducing himself, re-introducing himself, explaining himself, defending himself, reinventing himself, or simply destroying his opponent, TV is the medium of choice. And here’s the best part . . . there are no rules. Political advertising cannot be held to the same high truth standards of, say, a beer commercial. Try it. Refer to your opponent as Hitleresque! You’ve got nothing to lose but any chance of ever going to heaven!
Television advertising is indeed the elixir of choice for flailing campaigns in this country. If used correctly, broadcast media can turn an election around. Throughout the late summer and fall of 2004, President George W. Bush trailed Senator John Kerry in the presidential race. One CNN/USA Today/Gallup poll showed a steady increase in Senator Kerry’s poll numbers throughout September, reaching a high-water mark of forty-nine percent on October 9, while President Bush’s poll numbers declined over the same period from fifty-four percent to forty-eight percent. Then “Progress for America Voter Fund,” a political nonprofit group (also called a “527 group” because it is organized under section 527 of the Internal Revenue Service tax code) dedicated to defeating Senator John Kerry, began running ads in several key “battleground” states. All told, in the three weeks prior to the 2004 election, 527 groups that supported President Bush spent $30 million dollars on campaign advertising, triple the amount spent by 527 groups that supported Senator John Kerry. Thus, President Bush overcame his poll deficit and won reelection due in large part to the efforts of two relatively unknown political nonprofit entities that sprang from the ether and have since disappeared again.
What are these 527 groups and where do their millions of dollars come from? These 527 groups had been in existence prior to the 2004 election, but recent changes in campaign finance law dramatically increased their importance. Their role increased because, in 2002, Congress passed the Bipartisan Campaign Reform Act (“BCRA”). Prior to BCRA, campaign finance law prohibited wealthy individuals from donating to individual candidates. In the wake of such restrictions, wealthy donors could still contribute their money to local or state party affiliates to aid the federal candidates they supported. BCRA outlawed such circumvention tactics, and wealthy donors redirected their funds to ostensibly independent political nonprofit groups that were free from candidate or party control. Armed with hundreds of millions of dollars, these ostensibly independent organizations engaged in the most expensive, effective, and easily administered type of campaign expenditure: television advertising.
Under current campaign finance law, independent entities may not produce ads that expressly advocate the election of a federal candidate. If they did so, the money they expended would be considered a contribution to the candidate’s campaign. Thus, 527 groups must produce “issue ads” in order to avoid this outcome. Unfortunately, these sham issue ads are often overt candidate campaign ads that carefully avoid using express advocacy terms such as “vote for” or “vote against” particular candidates but are unmistakable candidate campaign ads. For example, one of the sponsors of BCRA, Senator John McCain, was himself a “victim” of a sham issue ad. During the 2000 Republican primary, an organization called “Republicans for Clean Air” ran the following “issue ad” in the days leading up to the Ohio primary election:
“Last year, John McCain voted against solar and renewable energy. That means more use of coal-burning plants that pollute our air. Ohio Republicans care about clean air. So does Governor Bush. He led one of the first states in America to clamp down on old coal-burning electric power plants. Bush’s clean air laws will reduce air pollution more than a quarter million tons a year. That’s like taking [five] million cars off the road. Governor Bush, leading so each day dawns brighter.”
By avoiding terms that expressly urge voters to cast their votes for George Bush, the preceding ad was not a Bush campaign ad. Months later, it surfaced that “Republicans for Clean Air” was actually only two billionaire Texas oilmen, brothers Charles and Sam Wyly, longtime friends and campaign contributors of then Texas Governor George W. Bush.
In the wake of the BCRA’s restrictions on large donations to political parties, large numbers of wealthy donors have outsourced the production of sham issue ads to ostensibly independent political nonprofit groups. Such groups are not necessarily considered “political committees” for purposes of campaign finance law. If they were, they would be subject to the same contribution limits as other political committees, such as the Republican and Democratic National Parties. In order for federal regulators to treat such groups as “political committees,” they must either register as a “political committee” with the Federal Election Commission (“FEC”) or the FEC must make that determination by evaluating the group’s activities, a practice the FEC has historically avoided.
This Comment proposes a per se rule that will classify any entity that produces campaign advertising as a “political committee” and subject the entity to campaign finance law. Part II.A will briefly survey the recent history of campaign finance law from the late 1970s until BCRA’s passage in 2002. Part II.B will describe BCRA’s new restrictions and wealthy donors’ use of 527 groups to circumvent them. Part II.C will survey existing proposals for reform. Part III will propose new legislation that will close the “527 loophole” that wealthy contributors have exploited since BCRA’s passage.