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by: Mr. Lulu Lakin


Marketplace > University of Texas at Austin > Law > LAW 381C > CONST LAW II BROWN TO BAKKE
Mr. Lulu Lakin
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This 30 page Class Notes was uploaded by Mr. Lulu Lakin on Sunday September 6, 2015. The Class Notes belongs to LAW 381C at University of Texas at Austin taught by Staff in Fall. Since its upload, it has received 36 views. For similar materials see /class/181636/law-381c-university-of-texas-at-austin in Law at University of Texas at Austin.




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Date Created: 09/06/15
Notes Do the Swift Boat Vets Need to MoveOn The Role of 527s in Contemporary American Democracy These 527 groups are not accused ofpaying o politicians peddling in uence or bene tingfrom corruption Their chiefsin is that they ve mobilized citizens to contribute money to advance their political convictions In a democracy that should count as a good thingiif not for politicians then certainlyfor the voting public 1 In the 2004 election a number of groups funded mainly by wealthy donors launched massive advertising campaigns in support of both Democratic and Republican candidates These 527 organizations named after the section of the Internal Revenue Code under which they are organized were quickly condenmed by many as a loophole and an unintended consequence of recent campaign nance reform measures But the 527s were already bound by campaign nance laws to reveal the source of their donations and to not coordinate with political campaigns 527s provided a new voice to citizens independent of political parties and candidates There has been a reactionary movement to restrict 527s and to return the money to the control of politicians This Note argues that unrestricted contributions to 527s are a constitutional and bene cial consequence of campaign nance reform2 Part I traces the history of campaign nance reform and 527 of the Internal Revenue Code IRC Part II discusses the role of 527s in the 2004 election and the controversy and criticism associated with the organizations Part III counters the speci c criticism that 527s are a loophole in the campaign nance scheme and then advances three main arguments as to the importance and necessity of unrestricted 527 organizations 1 individuals have a First Amendment right of association in independent organizations I am grate il to Professor Steve Bickerstaff at the University of Texas School of Law for his invaluable assistance in formulating this topic and Working closely with me on early dra s I would also like to thank Sara lanes William Burns and Jennifer Curtin for the amount oftime and thought they put into providing substantive comments and suggestions The editorial board and members of Texas Law Review have meticulously corrected and recorrected this Note so any remaining errors are mine I am gmteful to my friends and family for being supportive throughout this process And most of all I owe countless thanks to Liz Austin for not only being my rst and most frequent editor but also for providing a necessary balance of encouragement and distmction 1 Editorial Gasp They re Speaking Freely CHI TRIB Aug 30 2004 at C18 2 In this Note the term unrestricted 5275 is used to refer to the concept of unlimited contributions to 527s The author does not challenge the noncoordination or disclosure rules for 527s 768 Texas Law Review Vol 84767 2 a heightened standard of review should be applied to First Amendment claims of independent organizations and their individual contributors and 3 527s provide a vital outlet for citizens to participate in the democratic process by supporting fundamental democratic principles Part IV responds to proposals to limit 527s from legislators legal scholars and the Federal Election Commission FEC by arguing that 527s are different in kind from political parties and candidates and should therefore be addressed by a separate set of rules Rather than attempting to t 527s into the eXisting framework that focuses on political parties and candidates a new set of rules embracing 527s is both the practical and constitutional solution I The History of Campaign Finance Reform and 527 A Early Attempts atReform Limitations on campaign nance are not a novel idea in fact the tradition of campaign nance reform has deep roots in American political history Career statesman and lawyer Elihu Root one of the earliest proponents of campaign nance reform worried about protecting the public against wealthy interests currying favor through political donations3 President Theodore Roosevelt called for legislation to block all corporate contributions4 The 1907 Tillman Act banned corporate contributions for federal elections and was quickly amended to require public disclosure of quot 39 and l quot 5 Union quot 39 were restricted under the Hatch Act and later banned altogether6 The Department of Justice DOJ was the sole organization responsible for the enforcement of campaign nance laws until 1974 Although a number of laws were enacted during this time period the DOJ was ineffective in enforcing many of the laws Lawmakers recognized the need 3 Elihu Root The Political Use of Money Address of September 3 1894 in ELIHU ROOT ADDRESSES ON GOVERNMENT AND CITIZENSHIP 141 143 Robert Bacon amp James Brown Scott edS 1916 40 CONG REC 96 1905 recording President Roosevelt as declaring in his annual message to Congress that all contributions by corpomtions to any political committee or for any political purpose Should be forbidden by law 5 Tillman Act of 1907 Pub L No 5936 34 Stat 864 current version at 2 USC 441b 2005 6 Hatch Act ch 645 1 62 Stat 723 1948 repealed 1976 7 Todd Lochner amp Bruce E Cain Equity and Ef cacy in the En trcement of Campaign Finance Laws 77 TEXAS L REV 1891 1905796 1999 The DOJ remains responsible for law enforcement relating to campaign nance although the FEC has operated as the regulatory body Since 1974 These provisions are codi ed at 2 USC 437ga5AB 1994 See Kenneth A Gross The En trcement of Campaign Finance Rule A System in Search of Re nm 9 YALE L amp POL Y REv 279 281 1991 suggesting that efforts at enacting and reforming campaign nance laws were undermined by the repeated failure to enforce them 2006 Do the Swift Boat Vets Need to MoveOn 769 for stronger enforcement independent of the DO and a more cohesive set of laws to replace the piecemeal acts B The Federal Election Campaignlet Buckley V Valeo and Its Aftermath The rst major legislation in the modern campaign nance reform era came in 1972 with the passage of the Federal Election Campaign Act FECA9 The initial statute provided stronger disclosure requirements but failed to deter many fundraising problems and unsuitable campaign practices10 Congress responded by enacting a set of amendments to FECA in 1974 The 1974 amendments provided a stronger framework for campaign nance reform Among other measures the amendments limited individual contributions to candidates imposed a ceiling on campaign expenditures provided public matching funding for conventions and primaries and established the Federal Election Commission as a regulatory body for enforcing the campaign nance laws The Supreme Court upheld most of the 1974 amendments in Buckley V Valeo13 The only major provision struck down involved limitations on expenditures14 The Court also addressed the de nition of political committee under FECA15 FECA required a federal political committee to 9 Federal Election Campaign Act of 1971 Pub L No 92225 86 Stat 3 1972 codi ed as amended at 2 USC 4317442 2004 In this Note FECA refers to both the 1972 legislation and the current campaign nance scheme set in motion by that legislation 10 3017311 86 Stat at 11719 For a discussion of the shortcomings of FECA and the actions leading up to the 1974 amendments see DAer W ADAMANY amp GEORGE E AGREE POLITICAL MONEY 476 34 97 113715 145 1975 ll Fedeml Election Campaign Act Amendments of 1974 Pub L No 93443 88 Stat 1263 1974 codi ed as amended at 2 USC 4317442 2004 12 Pub L No 93443 101a 88 Stat 1263 codi ed as amended at 2 USC 44laal7 3 2000 limiting contributions and expenditures 88 Stat 1272 codi ed as amended at 2 USC 437da6 1994 establishing the FEC 88 Stat 1263 1974 setting up matching funds 13 424 Us 1 1976 14 Id at 17719 15 1d at 62763 FECA de nes political committee as follows 4 The term political committee meansi A any committee club association or other group of persons which receives contributions aggregating in excess of 1000 during a calendar year or which makes expenditures aggregating in excess of 1000 during a calendar year39 or B any separate segregated fund established under the provisions of section 44lbb of this title39 or C any local committee of a political party which receives contributions aggregating in excess of 5000 during a calendar year or makes payments exempted from the de nition of contribution or expenditure as de ned in paragraphs 8 and 9 aggregating in excess of 5000 during a calendar year or makes contributions aggregating in excess of 1000 during a calendar year or makes expenditures aggregating in excess of 1000 during a calendar year 2 USC 4314 2004 770 Texas Law Review Vol 84767 disclose its contributions and expenditures16 and limited contributions by individuals to political committees to 5000 per calendar year17 FECA de ned political committee in terms of contributions and expenditures18 but the Supreme Court concerned that the statutory de nition was vague and overbroad added a judicial test for determining federal political committee status whether the major purpose is the nomination or election of a candidate 19 This additional characteristic was speci cally designed to exclude organizations concerned with issue advocacy The Supreme Court also held that eXpress advocacy could be regulated but that issue advocacy fell outside the scope of the FEC20 EXpress advocacy was de ned in a footnote in terms of speci c advocacy of election or defeat 21 Although the Supreme Court upheld FECA the real test would come directly afterwards as political groups scrambled to abide by and test the limits of the law After Buckley two practices emerged as ways around FECA s requirements First the eXpress advocacy test was abused by political parties and committees to get around contribution and spending limitations The examples of eXpress advocacy set out in Buckley became known as the magic words 22 Groups could call for any number of things up to but not including these words and remain unrestricted because they were technically only engaging in issue advocacy23 This practice became known as sham issue advocacy 2Usc 434a 1d 441aa1C Id 4314 Buckley 424 US at 79 Id at 42744 2 1d at 44 n52 This construction would restrict the application of 608e1 to c m unications containing express Words of advocacy of election or defeag such as vote for elecg Support cast your ballot for Smith for Congress vote againsg defeat reject 2 ee e g Glenn J Moramarco Beyond Magic Wordr Using SelfDiscloxure to Regulate Electioneering 49 CATH U L REV 107 115720 1999 discussing the use ofthe magic Words test a er Buckle 23 The following are actual examples of issue advocacy orking families are struggling but Congressman 7 voted with Newt Gingrich to cut college loans While giving tax breaks to the Wealthy Tell him his priorities are all Wrong AFLCIO NHHHH EI oxooouox Congresswoman Andrea Seastrand has voted to make it easier to dump pollutants and e age into our Water Fact is it s time to dump Seastrand before she dumps anything else on us Sierra Club Tell President Clinton You can t afford higher taxes for more wasteful spending Republican National Committee MICHAEL J MALBIN OMAS L GAIS THE DAY AFTER REFORM SOBERING CAMPAIGN FINANCE LESSONS FROM THE AMERICAN STATES 11712 1998 24 Becky Cain Sham Imue Adv Solutions to a Clear Record of Abuse 10 STAN L amp POL Y REV 71 71772 1998 2006 Do the Swift Boat Vets Need to MoveOn 771 Second there was an explosion of what became known as soft money 25 Political parties could circumvent FECA s restrictions by funneling money through state and local committees outside the reach of the FEC and by using the money for administrative purposes The FEC allowed the use of soft money for party building activities and mixed purposes which could include both state and federal uses The emergence of soft money rendered FECA s restrictions all but obsolete An increasingly massive sum of money was still making its way to the parties and candidates28 Legislators recognized the need to strengthen the campaign nance reform measures by closing the soft money loophole C The Bipartisan Campaign Reform Act anndConnell v FEC In response Congress enacted the Bipartisan Campaign Reform Act BCRA in 200229 BCRA was designed to remove soft money from the hands of political parties and shut down the issue advocacy loophole Title I prohibited the use of soft money by candidates of ce holders and political parties30 In dealing with the mixedpurpose exception state groups were restricted from spending money on nonstate activities Title II of BCRA replaced the expressadvocacy versus issueadvocacy test with a new de nition of electioneering communication 32 The new de nition categorized any advertising that addressed a federal candidate within a certain time period before an election as a regulated expenditure33 25 See MALBI N amp GAIS supra note 23 at 12 For a general discussion ofboth sides ofthe so money issue see INSIDE THE CAMPAIGN FINANCE BATTLE 177115 Anthony Corrado et al eds 2003 a collection of articles by various scholars that address both the positive and the negative effects of so money 26 See Thomas E Mann The Rise of SoftMoney in INSIDE THE CAMPAIGN FINANCE BATTLE supra note 25 at 17 20723 suggesting that FEC rulings on the use of nonfederal funds in state local and administrative activities facilitated the rise of so mone 27 See PHILIP M STERN THE BEST CONGRESS MONEY CAN BUY 162765 1988 discussing the rise of so money as a FECA loophole 28 See McConnell v FEC 540 US 93 124725 2003 Of the two major parties total Spending so money accounted for 5 216 million in 1984 11 45 million in 1988 16 80 million in 1992 30 272 million in 1996 and 42 498 million in 2000 29 Bipartisan Campaign Reform Act of 2 02 Pub L No 107155 116 Stat 81 2002 codi ed as amended at 2 USC 4317456 Supp II 2004 BCRA is also known as McCain7 Feingold a er is Senate Sponsors and ShaysiMeehan a er its House Sponsors Senator McConnell has suggested that BCRA Should actually stand for Before Campaigning Retain Attorney Mitch McConnell The Future Is Now 3 ELECTION LJ 123 124 2004 30 2 USC4317441i 32 Id 434f3A 33 1d BCRA provides the following de nition i The term electioneering communication means any broadcast cable or Satellite communication whichi I refers to a clearly identi ed candidate for Fedeml of ce39 II is made Withini 772 Texas Law Review Vol 84767 Within hours of BCRA s passage a number of lawsuits were led to question its constitutionality34 The Supreme Court addressed the constitutionality of BCRA in McConnell V FEC The Court heard an extraordinary four hours of oral argument36 and eventually issued the secondlongest opinion in Supreme Court history37 One commentator referred to McConnell as the single greatest legal victory for campaign nance regulation since the modern era of campaign nance law 3 38 The major provisions of BCRA were upheld under concerns of corruption or the appearance of corruption39 and the Court documented a laundry list of what it considered to be corruptive practices40 The Court also embraced the less rigorous standard of review rst introduced in Buckley for contribution limits sought by the candidate 0 bb 30 days before a primary or preference election or a convention or caucus of a political party that has authority to nominate a candidate for the of ce sought by the candidate and 111 in the case of a communication which refers to a candidate for an of ce other than President or Vice President is targeted to the relevant electorate aa 60 days before a general special or runoff election for the of ce 39 r Id 34 See McConnell v FEC 251 F Supp 2d 176 206 DDC 2003 noting that Senator McConnell and the National Ri e Association led lawsuiw challenging BCRA the same morni it was signed into law 35 540 US 93 2003 For an excellent discussion ochConnell and BCRA see ROBERT BAUER MORE SOFT MONEY HARD LAW 2004 36 Online NeWsHour Supreme Court Hears Argumenw In Campaign Finance Challenge httpWWWpbsorgnewshourbblaw ulydec03scotusi98 html Sept 8 2003 37 Craig Holman T he Bipartisan Campaign Reform Act Limits and Opportunities tr Non pro t Grmps in FederalElections 31 N KY L REV 243 244 2004 38 Richard Briffault McConnell v FEC and the Transformation of Campaign Finance 3 ELECTION L J 147 147 2004 39 McConnell 540 US at 145746 40 1d at 145752 citing business leaders and lobbyists Who discussed contributing money to gain in uence 41 Id at 137 2006 Do the Swift Boat Vets Need to MoveOn 773 D The Introduction 0f 527 and the Rise 0f527s As Stealth PACs In 1975 Congress enacted 527 of the Internal Revenue Code42 Previously the Internal Revenue Service IRS had been responsible for the casebycase analysis of political organizations income but 527 speci ed a brightline test for determining the taX status of political organizationsiit clearly provided that contributions to the organizations were not to be taxe us in enacting 527 legislators cast a wide net to generally exempt protected political organizations One legal scholar has suggested that Congress assumed 527 organizations would be subject to the political committee requirements of CA44 When the Supreme Court decided Buckley and limited the FEC s regulatory authority to eXpress advocacy however 527 analysis departed from FECA requirements The distinction between eXpress and issue advocacy allowed 527s to engage solely in issue advocacy and thus avoid limitations under FECA while receiving taX bene ts at the same time The overwhelming postBuckley issues of soft money and issue advocacy dominated campaign nance talk and caused 527 to be widely ignored as a benign taX provision Section 527 remained an underutilized and relatively obscure provision of the taX code until an explosion of interest group registration in 1998 The Sierra Club was the rst major interest group to organize under 52745 Following an IRS private letter ruling that approved the status interest group 527s quickly proliferated Beyond the favorable taX status many issue advocacy organizations embraced 527 because it enabled them to avoid FECA s disclosure 2 Act of Jan 3 1975 Pub L No 93625 10a 88 Stat 2116 codi ed as amended at 26 USC 527 2000 Those provisions important for our purposes include the following 527 Political organizations a General rule A political organization shall be subject to taxation under this subtitle only to the extent provided in this section A political organization shall be considered an organization exempt from income taxes for the purpose of any law which refers to organizations exempt from income taxes e Other de nitions 1 Political organization The term political organization means a party committee association fund or other organization Whether or not incorpomted organized and operated primarily for the purpose of directl or indirectly accepting contributions or making expenditures or both for an exempt function 1d 43 Donald B Toobin Anonymous Speech and Section 527 of the Internal Revenue Code 37 GA L REV 611 622 n55 2003 citing s REP No 931357 at 4 25737 1974 44 Id at 623724 Richard Kornylak Note Disclosing the Election Related Activities of Interest Groups Through 527 ofthe Tax Code 87 CORNELL L REV 230 245 2001 46 IRS Priv Ltr Rul 199925051 June 25 1999 774 Texas Law Review Vol 84767 provisions The IRS did not require disclosure of contributions and expenditures and the groups did not have to register with the FEC Because the groups did not have to disclose information they could coordinate with political campaigns and parties without the public knowing The lack of transparency prompted criticism of 527s which were often referred to as stealth PACs 48 Congress quickly acted to close the disclosure loophole by passing legislation requiring registration with the IRS as a 527 organization49 The registration included disclosure information for donations over 200 by an individual in a calendar year50 and the IRS was then required to disclose this information to the public51 Interestingly the disclosure rules under 527 did not apply to organizations that were subject to FECA s requirements52 The Eleventh Circuit subsequently upheld the constitutionality of the 527 disclosure requirements53 With the ght over 527s and disclosure at an apparent end many scholars and legislators were satis ed that 527s would promptly slide into the background of campaign nance54 But the 527 controversy did not spend much time on the sidelines BCRA and the 2004 election saw a reemergence of 527s followed by an unparalleled storm of controversy II 527s and the 2004 Election A 527sP0st BCRA With BCRA prohibiting the use of soft money by candidates and political parties many people began to speculate where the money would go within the campaigns55 Donors turned to the 527 organizations as an 47 Although a certain level of coordination triggers FECA s limitations the FEC has set this threshold very high See General Public Political Communications Coordinated with Candidates and Party Committees Independent Expenditures 65 Fed Reg 76138 76142 Fed Election mm n Dec 6 2000 The Commission believes that a high standard is required to safeguard protected core First Amendment rights ee e g David D Storey Note T he Amendment of Section 527 Eliminating Stealth PACr and ProvidingaModel tr Future Campaign Finance Reform 77 IND L 167 174776 2002 49 Act of July 1 2000 Pub L No 106230 114 Stat 477 2000 codi ed as amended at 26 use 527 2000 50 Id at 480 51 Id at 481 52 Id 53 Mobile Republican Assembly v United States 353 F3d 1357 1359 11th Cir 2003 The Southern District of Alabama had previously held the disclosure requirements unconstitutional Nat l Fed n of Republican Assemblies v United States 218 F Supp 2d 1300 1354 SD Ala 2002 54 See eg Daniel L Simmons An Essay on Federal Income Taxation and Campaign Finance Reform 54 FLA L REV 1 81 2002 The disclosure requirements imposed on section 527 organizations might lead political entrepreneurs to return to the section 501c4 social Welfare organizations and section 501c3 charities as their conduiw of choice for political activity 55 See eg McConnell v FEC 540 US 93 224 2003 Money like Water Will always nd an outlet McConnell rupra note 29 at 123 Reform groups and e 39 orial ages are ownin u to the fact that not one dime has been removed from the political process David S Broder 2006 Do the Swift Boat Vets Need to MoveOn 775 alternative to soft money contributing mass sums to the independent organizations The groups were also successful in soliciting contributions from a wide variety of people in varying amounts57 Two of the most visible and effective 527s of the 2004 election were the MoveOnorg Voter Fund and the Swift Boat Veterans for Truth B Progressive Organizations and the MoveOn org Voter Fund The MoveOnorg Voter Fund is a 527 branch of MoveOnorg a 501c4 organization dedicated to antiwar and grassroots political involvement58 In 2003 and 2004 the Fund reported 12558215 in contributions The organization was funded in large part by billionaire investor George Soros60 The MoveOnorg Voter Fund made itself visible through various uses of the Internet a relatively new phenomenon in campaign tactics61 The MoveOnorg Voter Fund was one of the earliest 527s to have an effect on the 2004 election and became the poster child for liberal 527s in news reporting and editorials62 Other major liberal and Campaign Finance Casualties WASH POST Dec 17 2003 at A43 declaring that the pmctical effect of McCainiFeingold is likely to be to rearrange the oW ofmoney not to reduce it 56 This Note uses the statistics for the 2004 election found on WWWpublicintegrityorg Many of the gures cited date back to October 2004 due to the delay in publicizing disclosure information but the Websites cited are current as of December 6 2004 See Editorial What s So EVilAle Debate CHI TREB Sept 29 2004 at C24 noting that the victory over so money was short lived as funds began pouring into 527 organizations 57 Richard Briffault The 527 Problem and the Buckley Problem 73 GEO WASH L REV 949 964 2005 58 MoveOnorg Voter Fund httpmoveonvoterfundorg39 MoveOnorg Democmcy in Action httpmoveonorg Interestingly the name moveonorg stems from 1998 when founders Joan Blades and Wes Boyd formed the organization to urge representatives in Congress to move on past the Lewinsky scandal in the Clinton administration MoveOnorg Media Coverage http moveonorgpressmediacoveragehtml quoting Katie Hafner OnLine Petition Solicits Outrage at Congress NY TIMES Sept 24 1998 at G3 59 The Center for Public Integrity Silent Partners MoveOnorg Voter Fund 2004 Election Cycle httpWWW quot 39 39 nm 7 Stir id 1 4quot 1 60 During the 2004 election cycle Soros donated 2601000 to the MoveOnorg Voter Fund 1d Soros donated 24165000 total to 527s during that same time period The Center for Public Integrity Silent Partners Top Donors 2004 Election Cycle httpWWWpublicintegrityorg527 follow quotTop Donors hyperlink or more information on Soros see David Greising The New Face of Money in US Politics Soros Is Spending Big to Oust Bush GOP Paints Soros As a Radical CHI Tm July 25 2004 at c1 61 See Michelle Goldberg MoveOn Moves Up SALON Dec 1 2003 httpWWWsaloncom newsfeature2003l201moveonindexhtml 62 See e g Michael Janofsky amp Jennifer Lee Net Group Tries to Click Democrats to Power NY TIMES Nov 18 2003 at A22 noting that in its rst three Weeks the MoveOnorg Voter Fund raised more than 5 million from 86000 donors Glen Justice amp Jim Rutenberg The 2004 Campaign Advertising Political Grmps Taking on Bush in Ad Campaign NY TIMES Mar 10 2004 at Al discussing the impact of the MoveOnorg Voter Fund through a series of advertising campaigns coordinated with other liberal interest groups 776 Texas Law Review Vol 84767 progressive organizations include America Coming Together63 and the Media Fund 64 C Conservative Organizations and Swift Boat Veterans for Truth Although the leftleaning organizations formed more quickly and raised more funds in the beginning of the campaign process conservative organizations eventually outraised and outspent their counterparts on a monthbymonth basis Between August and October 2004 the conservative 527s raised approximately siX times as much as the progressive organizations65 Much of the surge in conservative 527s was due to the success of the Swift Boat Veterans for Truth The Swift Boat Vets were comprised of Vietnam veterans who like Democratic Presidential Nominee John Kerry served on swift boats 67 This organization generated controversy through its criticism of Kerry s actions during and after the Vietnam War68 The Swift Boat Vets were able to rely on wide media coverage and the publishing of a book by longstanding Kerry nemesis John E O Neill69 to get their message across This creative use of publicity was part of what prompted Democratic consultant Bill Carrick to give Republican 527s the more bang for the buck award 70 Other major conservative 527s 63 See eg Michael Janofsky Foes ofBurh Form PAC to Defeat Him NY TIMES Aug 8 2003 at A11 describing the founding of America Coming Together by the leaders of ve other groups with strong ties to Democratic causes httpactherecomp1an detailing the investment of over 135 million dollars by America Coming Together during the course of the 2004 election for identifying registering informing and organizing voters and grass roots activists to demand change see alro The Center for Public Integrity httpWWWpub1icintegrityorg527 pro leaspxactdirampsub1ampcyc1F2004ampid49 reporting that America Coming Together raised 54251096 and spent 78040481 during the 2004 election cycle 64 See The Center for Public Integrity httpWWWpub1icintegrityorg527 pro leaspxactq1irampsub1ampcyc1F2004ampid81 reporting that the Media Fund raised 15044184 and spent 59916255 during the 2004 election cycle 5 omas B Edsall A er Late Start Remblican Grows tmp Into the Lead Since Augmt 527s RaisedSix TimerArA chAr Democratr WASH POST Oct 17 2004 atA15 66 See er lic Integrity httpWWWpub1icintegrityorg527 pro leaspxactdirampsub1ampcyc1F2004ampid707 reporting that Swi Boat Veterans for Truth raised 17008090 and spent 22565360 during the 2004 election cycle Swi Vets and POWs for Truth httpswi vewcom 6 Charles Laurence Vietnam Veteram Ambush Kerry with an Attack on His War Record SUNDAY TELEGRAPH London Aug 1 2004 at 22 68 See Maria L La Ganga amp Stephen Braun The Race to the White Home Veterans Battle over the Truth LA TIMES Aug 17 2004 at A1 discussing the controversy created by the Swi Boat Vew claims that Kerry did not deserve his medals and that he betrayed armed forces personnel by protesting the War upon his return 69 JOHN E O NEILL amp JEROME R CORsr UNFIT FOR COMMAND SWIFT BOAT VETERANS SPEAK OUT AGAINST JOHN KERRY 2004 Kerry and O Neill rst debated on The Dick Cavett Show in 1971 The Dick Cavett Show ABC television broadcast June 30 1971 70 Edsall rupra note 65 at A15 2006 Do the Swift Boat Vets Need to MoveOn 777 include the Progress for America Voter Fund71 and Club for Growth Inc72 The Progress for America Voter Fund was also responsible for the largest ever single advertising purchase with the October 2004 Ashley s Story advertisement D Overall Statistics for 527s in 2004 In nancial terms 527s were enormously successful during the 2004 election cycle The Center for Public Integrity reports 395385133 in total expenditures for 527 organizations in 200474 Democratic or liberal groups accounted for 292262679 and Republican or conservative groups accounted for 112580250 Wealthy donors were responsible for a majority of the donations contributing 8 out of every 10 for liberal organizations and 9 out of every 10 for conservative organizations76 The 527s were also adept at catching public attention Public Opinion Strategies studied voters in siX battleground states and found that two of the three most in uential ads were produced by 527s the Swift Boat Vets series of ads and the Progress for America Voter Fund s Ashley s Story ads77 Much of the attention received by 527s was critical however The combination of negative ads and large sums of money caused many commentators to view 527s as antithetical to BCRA and its removal of soft money from parties and candidates A public outcry ensued across editorial pages the Internet and Congress calling for quick closure to the 527 loophole 78 71 See The Center for Public Integrity httpWWWpublicintegrityorg527 pro leaspxactdirampsublampcych2004ampid714 reporting that the Progress for America Voter Fund raised 44929178 and spent 35631377 during the 2004 election cycle 72 See The Center for Public Integrity httpWWWpublicintegrityorg527 pro leaspxactdirampsubl ampcych2004ampid6 reporting that Club for Growth Inc raised 8198388 and spent 9887619 during the 2004 election cycle 73 Ashley s Story featured a young girl Who lost her mother in the September 11 terrorist attacks The girl was comforted by President Bush at a campaign stop For more information see Ashley s Story httpWWWashleysstorycom See also Stephen Dinan Congress Ponders How 527s Add Up in Wake ofEleetion WASH TIMES Nov 14 2004 at A01 discussing the Ashley s Story ad campaign and purchase amounw 74 h quot 39 39 75 httpWWW quot 39 39 nm 7 ear h 7 xp i p ames V Grimaldi amp Thomas B Edsall Super Rieh Step into Political Vacuum MeCairk FeingoldPaved Wayfor 527s WASH POST Oct 17 2004 at A01 7 Jeffrey H Birnbaum amp Thomas B Edsall At the End ProGOP 527s Outspent Their Counterparts WASH POST Nov 6 2004 at A06 reporting the resulw of the study by Public Opinion Strategies 78 See e g Charles Krauthammer Editorial This Is Reform MeCairkFeingoldAeeenluates the Negative WASH POST Aug 13 2004 at A25 discussing the taxcode loophole that enables the fat cats to fund their own political advertising so long as they do not coordinate with the candidate Reps Shays Meehan File Suit to Close 527 Loophole Created by FEC FED NEWS SERVICE Sept 14 2004 detailing a press release announcing that joint suit had been led by Republican and Democratic Congressmen to force the FEC to regulate 527 groups William L Watts McCain Congress should Fix 527 Loophole in Sept MARKETWATCH Aug 29 2004 nrn 7 park 7 xp p 778 Texas Law Review Vol 84767 III Unrestricted 527s as Intentional and Necessary A Are 527s a Loophole in BCRA Much of the current criticism of 527s assumes that they by facilitating the injection of large contributions into the campaign cycle create an automatic way around the campaign nance rules and that the solution to this apparent loophole lies in relegislating 527s under FECA s political committee restrictions79 But in making such an assumption contemporary discourse glosses over the important underlying questions Do unrestricted 527s actually create a loophole in BCRA to begin with and if so should that loophole be closed by legislation This Note argues that unrestricted 527s are not a BCRA loophole and it goes on to discuss the several reasons why 527s should in fact be protected from legislative or regulatory restrictions At its core BCRA was an attempt to remove soft money from political parties and candidates According to Senator Feingold The ban on soft money de nes the legislation 80 But removing soft money from the grasp of parties and candidates is a far cry from taking major funding out of politics completely Thomas Mann a reformer who worked closely with BCRA s sponsors stated that the legislators were not intending to reduce the amount of money in politics Politics costs a lot of money 81 One commentator observed that regulating political expenditures is like loading squirrels into a golf cart You can put them there but you can t make them stay Removing large contributions from parties and candidatesikey players in the political processiand restricting an individual s ability to associate with an independent group are two wholly different concepts A true loophole in BCRA would provide candidates or political parties with access to large sums of soft money As discussed below unrestricted 527s do not present this same risk of corruption In M cConnell the Supreme Court upheld BCRA based on a concern for preventing corruption and the appearance of corruption 3 In discussing corruption the Court only addressed parties and candidates there was no similar analysis of independent organizations Thus because the Supreme Court has not addressed limiting individual contributions to independent reporting that Senator John McCain had urged Congress to close the campaign nance reform loophole One of the more colorful editorials accused members of the FEC of being party hacks that use gimmicks to support the lucrative campaign underworld of shadowparty politicking Editorial The EEG rMoekery ofILv Own Law NY TIMES Sept 21 2004 at A26 These assertions are addressed later See infra Part IV BAUER mpra note 35 at 1 n2 David S Broder OpEd Campaign Finance Camaltier WASH POST Dec 17 2003 at 00004 Hoxo A43 00 N Steve Chapman OpEd Marking Up Free Speech CHI TRIB Aug 29 2004 at C9 McConnell v FEC 540 US 93 145752 2003 00 L 2006 Do the Swift Boat Vets Need to MoveOn 779 groups that do not contribute to or coordinate with campaigns or parties84 unrestricted 527s cannot be considered a loophole in the postMcConnell It also would be disingenuous on the part of legislators to suggestias many recently havegsithat 527s simply were not contemplated by BCRA The notion that 527s were an unintended consequence of BCRA ies in the face of the stealthPAC controversy that was resolved only two years before BCRA s passage One commentator even suggested that the 527 disclosure legislation could be responsible for beginning a new era of campaign nance reform Following the passage of BCRA a number of scholars speculated that money would ow into 527s88 Predictions of a political resurgence of outside organizations were not limited to commentators and scholars Senator McConnell foresaw BCRA as crowning the stealth outside group king of a soft money monarchy 3 89 Furthermore Senator Lieberman stated in 19997three years before BCRAithat a soft money ban should be accompanied by stricter controls on election advocacy by third party groups 90 While these statements and predictions do not indicate that BCRA supporters speci cally favored unrestricted 527s they do suggest that the rise of 527s was probably not as shocking as many have claimed Robert Bauer argues that BCRA s restrictions were consciously not eXtended to outside organizations such as 527s for three main reasons91 First he argues that the legislation s authors restricted the regulation of soft money to political parties because in effect the soft money went straight to the candidates9 NeXt he claims that the drafters believed a soft money ban for political parties was more likely to survive constitutional review than one 84 Michael J Malbin Political Parties Under the PostMcConnell Bipartisan Campaign ReformAct 3 ELECTION LJ 177 189 2004 See e g John McCain Editorial Paying for Campaigns McCain Eyes Next Target USA TODAY Nov 24 2004 at 27A This new problem is not because of any de ciencies in McCaini Feingold The loophole for 527 groups was created solely by the Federal Election Commission FEC which is responsible for enforcing the nation s campaign nance laws 86 See supra subpart ID 87 Storey supra note 48 at 168 88 See e g Samuel Issacharoff Throwing in the Towel The Constitutional Morass of Campaign Fimnce 3 ELECTION LJ 259 259 2004 Perhaps money will move to the newest entrants the socalled 527 organizations Who Walk a nely dmwn line between seeking to in uence elections and express advocacy see also Michael Bailey The Two Sides of Money in Politics A Synthesis and Framework 3 ELECTION LJ 653 664 2004 recognizing that 527 groups can receive unlimited contributions despite BCRA s so money ban Richard H Pildes The Supreme Court 2003 T eWForeword39 The Constitutionalization of Democratic Politics 118 HARV L REV 28 142 2004 identifying 527 groups as the obvious route for donations a er BCRA oo 0 V McConnell supra note 29 at 123 Joseph Lieberman Campaign Finance 49 CATH U L REV 5 7 1999 BAUER supra note 35 at 3 1d 000 NHO 780 Texas Law Review Vol 84767 that included outside groups as well93 Finally he suggests that some Congressmen would have voted down harsher restrictions on independent organizations because of strong beliefs in the organizations constitutional rights94 Thus as discussed above 527s are not a loophole in BCRA Rather independent organizations such as 527s are left out of BCRA s coverage because they play a different less connected role in the election process This is an important distinction because a loophole couldiand likely shouldibe closed in a quick legislative or regulatory effort Because 527s are not a loophole however it is helpful to neXt address whether further restrictions would be either appropriate or constitutional B The Right ofAssociatiort The Supreme Court has long recognized the right of association as implicit in the First Amendment protections of speech press petition and assembly The right of association is at its strongest in the political conteXt In NAACP V Alabama the Supreme Court held that action which may have the effect of curtailing the freedom to associate is subject to the closest scrutiny 97 This standard applied whether the curtailments were intentional or unintentional98 In 1984 the Supreme Court clari ed the right of association in Roberts V United States Jaycees when it applied strict scrutiny to a statute burdening a political group99 First the Court asked whether the group was an intimate association which would implicate fundamental personal liberty issues or an expressive association which would invoke free association analysis100 After determining that the group in this case was eXpressive the Court looked to see whether there was a compelling state 93 Id 95 NAACP v Alabama ex rel Patterson 357 US 449 460 1958 It is beyond debate that freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the liberty assured by the Due Process Clause of the Fourteenth Amendment which embmces freedom of speech citing Staub v City of Baxley 355 US 313 321 1958 Cantwell v Connecticug 310 US 296 303 1940 Palko v Connecticut 302 US 319 324 1937 Gitlow v New York 268 Us 652 666 1925 96 See Buckley v Valeo 424 US 1 14 1976 acknowledging that the First Amendment provides is greatest protection to political expression 97 Patterson 357 US at 460761 The closest scrutiny is strict scrutiny 98 1d at 44939 see also LUCAS A POWE JR THE WARREN COURT AND AMERICAN POLITICS 166 2000 discussing Patterson 99 468 US 609 626727 1984 100 1 at61872l 2006 Do the Swift Boat Vets Need to MoveOn 781 interest unrelated to the suppression of ideas that could not be achieved through less restrictive means Clearly 527s are organizations that express political and ideological messages and thus should qualify for the heightened protection outlined in Roberts Moreover restrictions on 527s would not pass the test outlined in Roberts The groups are speci cally designed for political discourseithey are organized under 527 of the IRC for precisely this reasoniand much of their communication is directed toward the public which is an expensive activity Restricting citizens ability to contribute to 527 organizations would also burden the right of association because a signi cant majority of the funding comes from large donations by wealthy individuals102 Most 527s convey their messages through television and radio ads and mass mailings103 so restricting contributions would effectively prevent those groups from participating in these expensive forums As a practical matter 527s would be rendered highly ineffective and unable to communicate without the ability to receive large contributions When addressing the right of association in the context of campaign nance reform litigation however the Supreme Court has taken a markedly different approach from the above precedents104 rst in Buckley and again in McConnell One commentator has described the Court s reasoning as a profoundly limited view of the right of association 105 In Buckley the Court treated expenditures and contributions differently under the right of association Expenditures were treated as direct speech As such restrictions on expenditures were subject to strict scrutiny106 Contributions in contrast were viewed only as general expressions of candidate support that failed to communicate the underlying basis for that support The Court held that a contributor was thus still free to become a member of any political association and to assist personally in the association s efforts on behalf of candidates 108 Note that the Court applied 101 Id at 622723 deciding that the state s compelling interest in eliminating sex scrimination justi ed an antidiscrimination statute s impact on the group s male members associational freedoms 102 Grimaldi amp Edsall mpra note 76 at A01 103 See EVAN THOMAS ET AL ELECTION 2004 HOW BUSH WON AND WHAT YOU CAN EXPECT IN THE FUTURE 108709 2004 discussing the activities of 527s during the 2004 Presidential campaign SUSAN WELCH ET AL UNDERSTANDING AMERICAN GOVERNMENT 2967 97 8th ed 2006 describing the television advertisements of 527s during the 2004 Presidential campaign 104 For an excellent article on campaign nance and the Ii ht of association see Robert F Bauer McConnell Parties and the Decline of the Right of Association 3 ELECTION LJ 199 201 2004 105 Id at 199 106 See Buckley v Valeo 424 Us 1 1amp19 1976 asserting that campaign contributions and e enditures are properly classi ed as speechinot conductiand limitations on them are therefore subject to the exacting scrutiny required by the First Amendment 107 Id at 21 108 Id at 22 782 Texas Law Review Vol 84767 this analysis to 39 39 on quot 39 to 4394 t and partiesiwhich are patently different than 39 39 on quot 39 to 39 39 l 39 organizations The drafting history of the Buckley decision yields interesting clues to the contributioniexpenditure dichotomy In his preconference notes following oral arguments Justice Powell wrote Any limitation on a contribution to a political candidate or committee undoubtedly restricts the exercise of political speech But this restriction where one s money is turned over to someone else is not as severe or direct as the limitation on expenditures by individuals1 This explanation makes sense in the context of political parties and candidates Political parties are extremely hierarchical and bureaucratic in nature and individuals contributing to parties have little control over how the money is spent or the nature of the message communicated Contributions to political candidates are similar because they are given to an individual who then uses personal discretion to spend the money With both political parties and candidates the individual s act of speech is minimal after the contribution 527s allow citizens more direct use of their funding than political parties Political parties employ the Indirect Competition Principle 110 through which they use funds contributed for one issue to inform voters about another issue111 For example the Democratic Party may use money raised by a more controversial issue such as gay marriage on communications about something less controversial such as education proposals In this sense all of the interest groups within the party are competing with each other for funding 12 527s do not struggle with this competition because they usually address a limited number of issues Individuals can be assured that their money is going directly to the issue they nd most compelling Justice Powell s explanation for the dichotomy is not as convincing when the money is given to someone else who in effect speaks for the individual donor In fact contributions to 527s have a much stronger speech component than those to political parties and candidates In donating money to a 527 the individual speaks through the organizationihe exerts a greater in uence on the ideas presented by the organization because 527s are groups of citizens organized under a common political ideology Because the organization focuses on an issue or strategy the individual s donation has a 109 Internal Memorandum to File Nov 11 1975 in Lewis F Powell Jr Papers on le with the Washington and Lee University School of Law quoted in Richard L Hasen T he Untold DraftingHistory ofBuckley v Valeo 2 ELECHON L 241 243 2003 110 Bailey mpra note 88 at 659 1 1 1 Id 112 Id 2006 Do the Swift Boat Vets Need to MoveOn 783 more direct impact than would a similar donation to a political party or candidate Justice Powell s comments suggest that the differences between the minimal speech component of contributions to parties and candidates and the much more signi cant speech in contributions to 527s would call for differentiand heightenediconsideration of the right of association under independent 527s Despite the heightened associational issues in BCRA s restrictions on soft money the Supreme Court in McConnell did not reevaluate its precedent The Court described the plaintiffs claims that the burdens on association were fundamentally different from those in Buckley as greatly exaggerating a modest impact113 The Court stated it would account for the associational burdens in the application rather than the choice of the appropriate level of scrutiny 114 McConnell like Buckley did not deal with restrictions on individuals contributing to independent organizations In fact McConnell failed to address the rights of individuals who associate through the political parties115 This analysis would have been relevant to a discussion of 527s but unfortunately the Court was silent While Robert Bauer speculates that McConnell may signal the effective demise of the right of association in campaign nance jurisprudence 116 there is simply no way to accurately predict how the Court might weigh the rights of individuals to associate through independent 527s In 527s the rights of speech and association are closely linked The citizens band together into a 527 as a way to communicate When President Bush was promoting BCRA he stated that a rst and foremost principle of democracy is to strengthen the role of individuals in the political process y protecting the rights of citizen groups to engage in issue advocacy 117 Indeed this is precisely the function ful lled by 527s118 To embrace unrestricted 527s we must move beyond rhetoric and political posturing BCRA sought to protect the political process by limiting actions of participants both groups and individuals But the only way to truly protect the right of association is through af rmative support The right of association is a longstanding right that is essential to the freedoms of speech and assembly119 Without the right of association these other rights would be severely weakened But protection of this right is not 113 McConnell v FEC 540 US93141 2003 114 Id 115 Bauer mpra note 104 at 204 Id at 199 Stephen Moore Editorial Issue Ads Let Em Rip WASH POST Sept 18 2004 at A25 quoting remarks by George W Bush 118 Id rox 119 See Buckley v Valeo 424 US 1 25 1976 The Court s decisions involving associational freedoms establish that the right of association is a basic constitutional freedom citation omitted 784 Texas Law Review Vol 84767 simply a symbolic gesture interesting only to academics and political philosophers it is an endorsement of the practical reasons for association that are bene cial to democracy Individuals have many reasons for associating with those organizations that operate independently from political parties The 527s can offer a more effective and efficient route toward their desired goals120 The individual without a group would be forced not only to come up with the necessary funding but also to coordinate expenditures To produce a communication similar to the kind facilitated by 527s the individual nancier would have to seek out and employ public relations professionals commercial advertising producers creative artists accountants lawyers and a host of other necessary professionals Moreover there are only an elite few with the nancial means to individually contribute the funds necessary to produce any communication comparable to that produced by the 527s122 On a national level the voices of the other even major donors would be silenced Association with a group also adds signi cance and credibility to an individual s message123 Individuals whose criticism of a candidate may be easily dismissed tend to lack the credibility that a large group automatically gains through sheer numbers124 Even when multiple articles and eyewitness accounts seemed to discredit many of the Swift Boat Vets claims125 the group retained power and in uence because of its large membership of veterans Many people were thus willing to give the Swift Boat Vets the bene t of the doubt Progressive groups also bene ted from the credibility generated by numbers If George Soros had been forced to speak individually his claims would not have bene ted from the strength produced by the voices of thousands of other citizens Though much of the media attention towards MoveOnorg and other liberal 527s did focus on Soros the organizations themselves also received wide coverage and publicity for their views If Soros had spoken solely as an individual all of the attention would likely have focused on him personally The rhetoric probably would have 120 Robert F Bauer Contribution Limiw on 5275 Sept 12 2004 httpWWW moreso moneyhardlawcom Mar 21 2005 12 Many ofthe expenditures of 527s are disclosed to the IRS39 these disclosures can be found at httpWWWpub1icintegrityorg 122 Cf Steve Weissman amp Ruth Hassan BCRA and the 527 Groups in THE ELECTION AFTER REFORM MONEY POLITICS AND THE BIPARTISAN CAMPAIGN REFORM ACT Michael J Malbin ed forthcoming available at httpWWWc nstorgstudiesElectionA erReformpdfEAR7527 Chapterpdf 123 Bauer mpra note 120 124 1 125 See e g Kate Zernike amp Jim Rutenberg Friendly Fire The Birth of an Attack on Kerry MES Aug 20 2004 at A1 discussing the Swi Boat Vetemns backgrounds inconsistencies in their claims and their ties to the Republican Party 2006 Do the Swift Boat Vets Need to MoveOn 785 turned to ad hominem attacks126 Individuals can shield themselves from these attacks by associating with other people Although large donors will never achieve total anonymityiespecially considering disclosure requirementsithey may be able to de ect attention away from their personal lives and toward the groups and issues they support The right of association is a strongly held freedom that bene ts individual citizens in the democratic process As the above discussion makes clear limitations on the right of individuals to associate within the conteXt of independent 527s should thus be subject to strict scrutiny Furthermore the best way to protect this right is to allow unrestricted contributions to 527s C Heightened Standard ofReview The Supreme Court decided McConnell using a weakened standard of review127 One of the main reasons for weakening the standard was deference to Congress128 This subpart eXplains why substantial deference to Congress in the arena of 527 legislation is inappropriate and why the proper standard of review for 527s is strict scrutiny McConnell used the closely drawn level of scrutiny articulated in Buckley129 The majority opinion in McConnell stated The less rigorous standard of review we have applied to contribution limitsshows proper deference to Congress ability to weigh competing constitutional interests in an area in which it enjoys particular expertise It also provides Congress with suf cient room to anticipate and respond to concerns about circumvention of regulations designed to protect the integrity of the political process Though the Supreme Court framed this standard as deferential it operates in practice as a blank check that allows Congress to enact arguably questionable legislation If the Court applies this same standard to an analysis of 527 legislation it will likely ignore a number of constitutional issues The particular expertise cited by the Supreme Court in McConnell presumably refers to the eXperience individual legislators have had with campaign activities But the current rules sharply curtail a political candidate s ability to gain rsthand experience with 527s131 Noncoordination provisions prevent candidate contact with 527 126 This is not to suggest that Soros was not attacked during the 2004 election Speaker Dennis Hastert even insinuated that Soros received money from dm cartels Fox News Sunday Fox News Channel television broadcast Aug 29 2004 transcript available at httpWWW fox newscomstory0293313036600 html Mar 21 2005 127 McConnell v FEC 540 US 93 137 2003 128 Id 129 Id 130 Id 131 26 USC 527e5D 786 Texas Law Review Vol 84767 organizations132 Thus Congress possesses no particular expertise not also possessed by the general viewing public John Kerry likely has a negative View of 527s after his experience with the Swift Boat Vets and George W Bush probably has similar feelings after hearing the communications of MoveOnorg If anything politicians should be held to closer scrutiny for any legislation they pass involving 527s because of their limitediand often negativeiinteraction with 527s Giving Congress substantial deference also ignores the judiciary s role in American democracy Although Congress may have an ability to weigh competing constitutional interests 133 it is the Supreme Court s responsibility to determine the constitutionality of legislation134 The McConnell type of assumed constitutionality strips the Court of its ability to truly function as a decisionmaker Even if the Court actively desires to shirk its responsibility for determining constitutionality this should not be allowed for 527s The interests of citizens embodied by 527s deserve at least honest consideration in light of the often con icting interests of lawmakers Samuel Issacharoff has suggested an alternative to the opposite extremes of substantial deference and an active judiciary that he calls 39 39 quotm The core idea of process integrity is that the legitimacy of democratic processes turns on protection of the competitive accountability to the electorate To a large degree that protection must come from the courts Process integrity encourages the courts to intervene in the name of citizens to ensure public con dence in the political process In his Bush V Gore concurrence Justice Scalia stated that preventing recounts would ensure election results that have the public acceptance democratic stability requires 13 Though Justice Scalia s statement is not an explicit embrace of process integrity it hints at the same concerns and goals The Supreme Court can and should utilize the process integrity model with regard to 527s Legislation designed to limit individual participation in the campaign process brings into question the integrity of the democratic experience The more that individual citizens rights are undermined the more likely it is that they will lose faith in the system Embracing 527s assures citizens that they are welcome participants in the election process In contrast limiting 527s would signal an ongoing effort by politicians to sti e 132 Id 133 McConnell 540 US at 137 134 See City of Boerne v Flores 521 US 507 519 1997 Congress has been given the power to enforce not the power to determine What constitutes a constitutional violation see alxo Miller v Johnson 515 US 900 922723 1995 A permanent and indispensable feature of our constitutional system is that the federal judiciary is supreme in the exposition of the law of the Constitutionm quoting Cooper v Aaron 358 US 1 18 1958 135 Issacharoff 5147M note 88 at 263 136 Id 137 Bush v Gore Bush I 531 US 1046 1047 2000 Scalia J concurring 2006 Do the Swift Boat Vets Need to MoveOn 787 independent activity these attempts would alienate citizens while ensuring a process controlled solely by politicians and parties Process integrity would also provide an assurance against the perceived imbalance of power between incumbent politicians and their challengers At times campaign nance reform has been greeted with heavy skepticism due to its apparent proincumbent nature138 There are con icting statistics as to whether soft money restrictions bene t incumbents or challengers but most of the studies suggest a large bene t to incumbents139 This skepticism should not be limited to an incumbentichallenger discussion there is as muchiif not moreiof a con ict of interest between legislators and independent organizations as there is between incumbents and challengers In a press conference Senator John McCain predicted strong support for legislation that would severely restrict 527s140 His main reason for eXpecting support was that candidates have no control over the campaign One thing the candidate likes to do is have control over the message and that s not the case with the 527s 141 In other words Senator McCain knows that other congressmen will support the legislation because it takes the control and voice away from citizens and puts them back into the hands of the politicians A cynical view of campaign nance reform suggests that recent criticisms of 527s by incumbents are actually selfserving attempts to eliminate negative ads142 Process integrity would protect the political system against such abuses of power In contrast substantial deference to Congress would speci cally ignore preBCRA oor debates concerning the injustices of negative advertising143 Giving incumbents the bene t of the doubt when legislating against 527s is like allowing foxes to guard the hen house If Congress fails to embrace a citizen s right to participate in 138 See egMeConnell 540 US at 249 Scalia J dissenting in part and concurring in part If all electioneering were evenhandedly prohibited incumbenw would have an enormous advantage Is it accidental do you think that incumbenw raise about three times as much hard money ithe sort of funding generally not restricted by this legislationias do their challengers7 Colo Republican Fed Campaign Comm v FEC 518 US 604 644 n9 1996 Thomas J concurring in judgment and dissenting in part noting that history has shown that most election reforms result in greater protection for incumbents But of Buckley v Valeo 424 US 1 31733 1976 establishing a fmmework for considering evenhandedness in campaign nance laws and declining to nd an unfair advantage for incumbents 139 See eg BRUCE ACKERMAN amp IAN AYRES VOTING WITH DOLLARS 156758 2002 discussing the bene ts of campaign nance reform for incumbenw James C Wald Note Money Talks Politicians Listen The Constitutional Grounds for Controlling So Money 12 S CAL INTERDISC LJ 319 347 2003 addressing challengers dif culties in raising hard money 140 Senator John McCain Press Conference on the 527 Reform Act Feb 2 2005 141 1 142 Malbin supra note 84 at 184 143 Robert F Bauer Campaign Finance Reform and Legislative SelfInterest Dec 1 2004 http64233187 1 m 1i a 1 7 e icandidatesiof ceholders htm13FArchive3D126AID3D21 r us cesofnegativetpo litica1advertisingBaueramphlen 788 Texas Law Review Vol 84767 democracy through independent organizations the judiciary must step in to preserve the integrity of the process from competing interests of politicians Strict scrutiny provides proper protection for an individual s First Amendment rights to participate through 527s This heightened standard is the modern successor to the preferred freedoms doctrine144 which gave a high degree of protection to rights that are fundamental to a free society145 This analysis evolved into strict scrutiny requiring a compelling state interest and a narrowly tailored means of restricting fundamental rights146 As the Supreme Court held in NAACP V Alabama the right of association should be considered a fundamental right and strict scrutiny should apply147 Although the Supreme Court has applied a weaker standard in campaign nance decisions regarding parties and candidates strict scrutiny should be eXplicitly eXtended to a citizen s right to associate through independent political organizations Restrictions on a fundamental rightihere the right of associationi trigger strict scrutiny Thus the legislature should have to demonstrate a compelling state interest in restricting this right If the government attempts to limit 527 association and contribution based on BCRA s rationale such limitations should fail this test The interests of limiting soft money to parties and candidates and preventing corruption and the appearance of corruption are not compelling enough when applied to 527s As discussed above the soft money ban shifted money away from candidates and parties it was not intended to eliminate money from politics altogether As discussed below in Part IV 527s do not present the same concerns for corruption as parties and candidates The 527s cannot coordinate with candidates or parties so they lack the ability to corrupt the political process For the above reasons the Supreme Court should acknowledge and protect citizens right to participate in 527s The weakened standard that has been used in previous campaign nance decisions should not apply to 527s because they present signi cantly different issues Instead the First Amendment rights of citizens in 527s should be given the highest constitutional protection strict scrutiny D Fundamental Democratic Principles Beyond the mostly legal concerns addressed above 527s also support fundamental democratic principles This section discusses the 144 See LEE EPSTEIN amp THOMAS G WALKER CONSTlTUTIONAL LAW FOR A CHANGING AMERICA RIGHTS LIBERTIES AND JUSTICE 232 5th ed 2004 describing the origin of the preferred freedoms doctrine in the famous footnote four of United States v Carolene Products 304 US 1441938 145 See id 146 Id 147 NAACP v Alabama ex rel Patterson 357 US 449 460761 1958 2006 Do the Swift Boat Vets Need to MoveOn 789 encouragement of citizen participation and places 527s within the context of the work of various political philosophers Democracy is based on the participation of the citizenry through both voting and campaign activities Limitations on an individual s ability to participate in the democratic process affect both the individual and society at large As discussed above limitations on participation can call the integrity of the political process into question Conversely increased participation bolsters the process Individuals bene t from this opportunity by exercising their rights and society bene ts from the continued debate of issues Lisa Young argues that democracy is strongest when citizens are engaged in the political process148 She quotes Margaret Nugent and John Johannes threepronged bene t analysis of citizen participation Citizen participation provides a mechanism for citizen control of government decreases the likelihood that certain interests are being overlooked in policy making process and enhances the perceived legitimacy of the government 149 527s achieve these goals by providing citizens with an alternative to party and candidate participation Although the traditional avenues are still available 527s provide unique opportunities for political participation Citizens who are deeply interested in a single issue may not feel inclined to support a political party or candidate but they can focus on this issue through support of a 527150 Likewise 527s can provide a different dynamic than parties and candidates For example MoveOnorg sent communications over the Internet and engaged in more controversial communications than the Democratic Party These methods could be appealing to younger citizens as well as people looking for a more aggressive approach This difference in approach was also duplicated on 1Sa Young Regulating Campaign Fimnee in Canada Strengths and Weaknesses 3 ELECTION LJ 444 445 2004 149 MARGARET LATUS NUGENT amp JOHN R JOHANNES Introduction What Is at Smke in MONEY ELECTIONS AND DEMOCRACY REFORMING CONGRESSIONAL CAMPAIGN FINANCE 11 1990 150 See discussion supra subpart IIIB 151 See Janofsky amp Lee supra note 62 at A22 explaining MoveOnorg S use of the internet to mobilize its members and wise money Jim Rutenberg Seary Ads Take Campaign to a Grim New Level NY TIMES Oct 17 2004 at D1 describing MoveOnorg S Sponsorship ofa group that ran ads raising the Specter of a return to the dra under George W Bush 152 See Hanna Rosin Vote Swingers Suddenly Politics Is HotAgain Sometimes Really Hot WASH POST Oct 17 2004 at D1 listing various methods used by groups to interest younger people in the political process MoveOnorg Sponsored a contest inviting the submission of homemade political ads that Were then judged by celebrities 1d Another group Votergasm recruited volunteers Who either agreed to withhold sex from people Who had not voted or in the alternate pledged to have sex with a voter 1d Votergasm s use of sex in an attempt to manipulate the political process is not Without precedent See eg Aristophanes Lysistrata in 3 ARISTOPHANES 2 Benjamin B Rogers trans William Heinemann Ltd 1924 detailing the thenian Women s plan to force an end to the Peloponnesian War by Withholding sex from their husbands 790 Texas Law Review Vol 84767 the Republican side with 527s providing the most hardhitting and critical ads 3 Society as a whole bene ts from unrestricted contributions to 527s Independent organizations such as 527s educate the public about different facets of issues and candidates James Madison described the bene t of an educated public The value and efficacy of the right of electing the government depends on the knowledge of the comparative merits and demerits of the candidates for public trust and on the equal freedom consequently of examining and discussing these merits and demerits of the candidates respectively 154 The equal freedom that Madison refers to will be severely restricted if Congress legislates away the ability to participate outside of parties and candidates Madison s statement shows the importance of not merely allowing issues to be discussed but facilitating and actively encouraging debate 527s provide an opportunity to widen the discussion during campaigns and present the public with a variety of views Other political philosophers have eXpressed similar sentiments that support 527type organizations Turning to the beginnings of political philosophy Aristotle described political association as the most sovereign and inclusive association 3 1 The elevation of political association above all other types of association supports the arguments in favor of strongly protecting First Amendment rights in the campaign nance conteXt Later AleXis de Tocqueville addressed the right of association as an inalienable right that was essential to a democracy156 He eloquently stated the tensions between independent organizations and politicians trying to legislate against them Among democratic nations it is only by association that the resistance of the people to the government can ever display itself hence the government always looks with ill favor on those associations which are not in its power More importantlyiand perhaps even more adeptlyide Tocqueville eXplained the relationship of the public to organizations such as 527s The people themselves often entertain against these very associations a secret feeling of fear and jealousy which prevents the citizens from defending the institutions of which they stand so much in need The 153 See Rutenberg 5147M note 151 at D1 reporting on a Republican group s ad featuring a phalanx of masked terrorists as an announcer asked would you trust Kerry against these fanatic killers 154 James Madison Report on the Virginia Resolutions in 4 THE DEBATES IN THE SEVERAL STATE CONVENTIONS ON THE ADOPTION OF THE FEDERAL CONSTITUTION 546 575 Jonathan Elliot ed 2d ed 1937 155 ARISTOTLE POLITICS 7 Ernest Baker trans Oxford University Press 1998 56 See ALEXIS DE TOCQUEerLE DEMOCRACY IN AMERICA 107 Phillips Bradley ed Alfred A Knopf 1945 1840 If men living in democratic countries had no right and no inclination to associate for political purposes their independence would be in great jeopardy and if they never acquired the habit of forming associations in ordinary life civilization iwelf Would be endangered 157111 at311 2006 Do the Swift Boat Vets Need to MoveOn 791 power and duration of these small private bodies in the midst of the weakness and instability of the whole community astonish and alarm the people and the free use which each association makes of its natural powers is almost regarded as a dangerous privilege158 De Tocqueville s explanation for public hostility is essential to an understanding of 527s because it is apparently a natural reaction to strong associations Public opposition to 527s is not necessarily uniqueithis type of con ict has been ongoing since de Tocqueville s observations in the nineteenth century Acknowledging and confronting the nature of the hostility would be extremely useful when weighing the interests of society with interests of individuals in legislating 527s Adam Smith addressed the connection between money and politics In an age where money is assumed to equate with power in campaigns it would be wise to consider Smith s statement that a fortune may perhaps afford him the means of acquiring political power but the mere possession of that fortune does not necessarily convey it to him 159 The preoccupation with eliminating money as a way to cleanse politics should be tempered by consideration of Smith s argument The presence of money itself is not a corrupting factor Although the Supreme Court upheld BCRA s soft money bans under the guise of preventing corruption contributions to 527s should be afforded a more indepth discussion large donations do not automatically provide vast political power or corruption Smith s statements support the notion that the discussion about 527s should not be so focused on sheer dollar amounts but should be more concerned with practical realities It is easy to assume that money equates to power and corruption but in actuality this could be far from the truth John Stuart Mill recognized the importance of dissenting voices in furthering debate Mill strongly believed in the signi cance of challenging opinions as a way to nd the truth and even placed it in the context of multiple generations The peculiar evil of silencing the expression of an opinion is that it is robbing the human race posterity as well as the existing generation those who dissent from the opinion still more than those who hold it If the opinion is right they are deprived of the opportunity of exchanging error for truth if wrong they lose what is almost as great a bene t the clearer perception and livelier impression of truth produced by its collision with error16 Interestingly Mill shifted the importance of expression to those who disagree with another s communication In this sense the 527s are 158 Id at 311712 159 ADAM SM1TH AN INQUIRY INTo THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 31 James ET Rogers ed 2d ed Oxford Clarendon Press 1880 1776 160 JOHN STUART MILL ON LIBERTY 14 Paul Negn39 ed Dover Publications 2002 1859 792 Texas Law Review Vol 84767 performing a service to those they criticize 1 Applying this theory MoveOnorg was actually providing George W Bush the opportunity to eXplain his decisions concerning the Iraq War among many other decisions Similarly John Kerry bene ted from the Swift Boat Vets providing him the occasion to address his war record The 527s gave citizens the opportunity to base their support for or opposition to a candidate on responses to the tough questions these organizations posed Although these arguments are neither binding precedent nor concrete legal requirements they are persuasive nonetheless and provide lawmakers with many unique considerations Politicians are likely to look beyond sheer legal concerns to public opinion when considering limiting 527s When legislators address persuasive concerns they should not neglect the above fundamental democratic principles The statements of these philosophers place the 527 debate into a broader political tradition in which dissent and the right of association are wellestablished and essential values These values should continue in American politics through the embrace of unrestricted contributions to 527s IV Proposals and Solutions A FEC Proposals to Limit or Eliminate 527s On March 11 2004 the FEC submitted a notice of proposed rulemaking to determine whether political committee status should be amended to eXplicitly cover 527s 2 At the FEC hearings various proposals were presented urging that the de nition of political committee be eXpanded to include 527s and that 527s be subject to FECA rules that limit contributions 3 The FEC rulemaking focused on utilizing the eXisting FECA framework to restrict 527s 4 Using the Buckley twopart test the FEC assumed that 527s were political in nature because they registered with the IRS as political 161 This is similar to the marketplace of ideas theory But When men have realized that time has upset many ghting faiths they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideasithat the best test of truth is the power of the thought to get iwelf accepted in the competition of the market and that truth is the only ground upon which their Wishes safely can be carried out That at any rate is the theory of our Constitution Abrams v United States 250 US 616 630 1919 Holmes J dissenting 162 FEC Political Committee Status 69 Fed Reg 11736 11748 proposed Mar 11 2004 to be codi ed at 11 CFR pt 100 102 104 106 114 163 See generally FEC Public Hearing on Political Committee Status Apr 14 2004 httpWWW fecgovpd np1mpoliticalicommistztustrans704714704pd FEC Public Hearing on Political Committee Status Apr 15 2004 httpWWW fecgovpdfnprmpoliticalicommistztus tmns704715704pdf 164 See FEC Political Committee Status 69 Fed Reg at 11736 The Commission is undertakin this rulemaking to revisit the issue of Whether the current de nition of political committee adequately encompasses all organizations that should be considered political committees subject to the limitations prohibitions and reporting requirements of FECA 2006 Do the Swift Boat Vets Need to MoveOn 793 committees 5 Suggestions at the hearings mainly varied as to how the major purpose test should be codi ed using a dollar amount threshold or a percentage of expenditures 7 were common examples These proposals would have severely limited the ability of citizens to contribute to 527s and would have prevented 527s from functioning at anything close to their current levels The approaches discussed above ignore the distinctions between 527 status and political committees As discussed in Part I 527 status was designed to cast a wide net and provide taXfree status to many organizations Political committee status on the other hand was limited in Buckley because of FECA s harsh restrictions on contributions Equating the two de nitionsipolitical organization and political committeeion account of their similar wording fails to recognize the practical differences between 527 and FECA regarding campaign nance policy Codifying Buckley s major purpose test presents problems as well The major purpose test was an inelegant attempt at saving the otherwise unconstitutional FECA legislation 8 The above suggestions for codifying the major purpose test ignore the spirit of the Court s limitations political committee should have a narrow de nition so that it does not ensnare constitutionally protected organizations The proposed rules use the same wordingi major purpose ibut their thresholds depart in practice and in purpose from the Court s test On November 11 2004 after debating various suggestions and arriving at a proposed rule the FEC rejected the amendments to political committee status and let the current de nition stand 9 For the time being the FEC will operate with the combination of the statutory FECA dollar amount test and the courtcreated Buckley major purpose test Although the FEC correctly rejected the proposals a number of congressmen took this inaction as a call to arms B Proposed 527 Legislation The 527Ref0rm Act 0f2005 On February 2 2005 a press conference was held170 to announce the introduction of a new piece of legislation the 527 Reform Act of 2005171 165 See id at 11748 discussing possible exceptions to the proposed rule that all 527s would be assumed to meet the major puipose test 166 See Notice of Proposed Rulemaking 69 Fed Reg 11736 11745746 Mar 11 2004 to be codi ed at 11 CFR pt 100 proposing a 10000 threshold as a major puipose regulatory test 167 Id at 11747 168 See 5147M text accompanying note 19 169 FEC Political Committee Status 69 Fed Reg 68056 6806L65 Nov 23 2004 to be codi ed at 11 CFR pt 100 102 104 106 170 Senator Russell Feingold Senator Trent Lott Senator John McCain Senator Charles Schumer Representative Martin Meehan Representative Christopher Shays Press Conference on 527 Reform Act Feb 2 2005 tmnscript on le with author 794 Texas Law Review Vol 84767 The sponsors of BCRAiSenators Feingold and McCain and Representatives Meehan and Shaysiwere joined by an unlikely ally Senator Trent Lott Senator Lott voted against BCRA but apparently had a change of heart regarding 527s172 In a bit of Groundhog Daythemed humor Lott remarked that much like Punxsutawney Phil he saw a lot of shadows in these 527s 173 Perhaps in his rush to join the campaign nance reform bandwagon Senator Lott should have looked a little closer at the current state of 527s In his remarks he stated At the very minimum we ought to put the sunlight on 527s We need to know where this money s coming from who s giving it and where it is going 174 Of course all of this information is already required under the disclosure provisions175 This suggests that even the politicians leading the charge have failed to adequately consider and understand the repercussions of their proposals in their efforts to pave over 527s as quickly as possible The proposed legislation would severely limit participation in 527s by restricting contributions and controlling how 527s nance particular activities Most importantly all 527s7with narrow exceptionsmiwould be required to register with the FEC as political committees and be subject to the restrictions that come with the designation177 This would limit individuals contributions to 5000 per calendar yeariwhich will be deposited into a federal accountiand would bar contributions from corporations unions and other groups178 The hard money in the federal account would have to comprise at least fty percent of any money spent on public communications or voter drives that mentioned federal candidates or political parties along with nonfederal candidates179 The federal account would have to cover one hundred percent of costs for communications that mention one or more federal candidates regardless of whether the 0 communication refers to a particular political party18 The federal hard 171 527 Reform Act of 2005 S 271 109th Cong 2005 The Senate Committee on Rules and Administration held hearings on the bill on March 8 2005 Senator Trent Lott then placed the bill on the Senate calendar on May 17 2005 as 81023 The parallel bill in the House was introduced by Representative Christopher Shays on February 2 2005 As of the publication of this Note the bills are still pending as described above For the bill s current status check wwwcongressgov 172 Morning Edition McCain Eyes Reigning in 527 Grows NPR Radio Broadcast Feb 3 2005 175 See discussion mpra subpart 1D 176 S 271 2bB The exceptions are for organizations reasonably anticipating receipts of less than 25000 and committees solely for state or local candidates 1 177 1d 2bAi 178 1d 271 3ad2 179 1d 271 3ab 180 1d 271 3abl 2006 Do the Swift Boat Vets Need to MoveOn 795 money would also have to be used to pay at least fty percent of 527s overhead costs rent utilities of ce supplies and salaries 81 The legislation would also create a quali ed nonfederal account 182 Like the federal account the nonfederal account would limit individuals contributions but here contributions may reach 25000 per calendar year183 Expenditures not coming from the federal account would have to come from the nonfederal account 527s would also be required to disclose their nonfederal funds in the same manner as they disclose their federal contributions and eXpenditures184 These restrictions would force 527s to raise signi cantly more hard ey and in so doing they totally ignore 527s unique goals regarding federal elections185 They would change the face and operation of 527s rendering them inef cient and useless It would destroy the noncoordination incentives that have made 527s such important and unique actors in the political landscape The proposed legislation also operates as a onesize tsall solution for a group of diverse organizations with signi cantly differing goals If an organization focused ninety percent of its efforts on nonfederal elections it would fall within the same restrictions as an organization that was solely devoted to federal elections Any type of legislation that took reform seriously would allow for consideration of the varying organizations that fall under the 527 taX exemption The legislation also steps widely outside of the previous campaign nance framework by placing limits on the nonfederal accounts By de nition money in these accounts must be spent on otherthanfederal electionsm At this point the legislation seeks to not only change the face of federal elections but other types of elections as well This sets a dangerous precedent for future legislation C 52 7sAs Differingfrom Candidates andPolt39tt39cal Parties The above legislative proposals assume that 527s should be contained within the current framework of FECA But FECA and BCRA were designed to limit candidates and political parties not independent Id 271 3ab5 Id 271 3ac Id 271 3ac2A Id 271 3b 185 Robert F Bauer New 527 Bill Is Introduced MORE SOFT MONEY HARD LAW Feb 2 2005 httpWWW f outsideigroupshtmlAID263 186 Hearing to Examine and Discuss S 271 a Bill Which Reforms the Regulatory and Reporting Stmclure of Organizations Registered Under Section 527 of the Internal Revenue Code Hearing Before the Sen Comm on Rules and Admin 109th Cong 11 2005 hereina er Testimony of Robert Bauer statement of Robert F Bauer Partner at Perkins Coie LLP available at httprulessenategovhearings2005BauerTestirnonypdf oooooooo AwNH


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