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House Approval of Bipartisan Legislation to Force Disclosure Of Secret “Section 527″Money in Elections Is Significant Step in

June 28, 2000

House Approval of Bipartisan Legislation to Force Disclosure Of Secret “Section 527″Money in Elections Is Significant Step in
Campaign Finance Reform

Bill to be Reconciled With Similar McCain-Feingold-Lieberman
Provision That Passed the Senate

WASHINGTON, D.C. — The House s approval of a bill to force the disclosure of contributions and expenditures for federal elections by so-called “Section 527 Stealth PACs” represents an important breakthrough on campaign finance reform, Public Citizen representatives said today.

The bill, which was pushed by House reformers, was approved last night by 385-39. It is anticipated that the bill soon will be reconciled with a similar measure that passed the Senate earlier this month.

These new vehicles for secret, unlimited election money formed under Section 527 of the federal tax code have the declared primary purpose of influencing elections. They have become the latest loophole in federal campaign finance law. Scores of these tax-exempt private groups, which come from all sides of the political spectrum, are raising and spending tens of millions of dollars to influence the 2000 federal elections without publicly reporting their existence, sponsorship, receipts, contributions and expenditures.

“Clever tax lawyers created this loophole to enable wealthy donors to secretly influence elections,” said Frank Clemente, director of Public Citizen s Congress Watch.

Unlike “old” Section 527 groups such as candidate and party committees and PACs, which were specifically required by federal campaign finance law to report to the Federal Election Commission, the “new” types of Section 527 groups are free to run secret, partisan advertising, voter registration and get-out-the-vote campaigns. Not only private groups (from the prescription drug industry s Citizens for Better Medicare to the Sierra Club), but even the candidates themselves are getting into the act.

For example, in this election cycle, dozens of congressional and presidential candidates have formed section 527 “State Leadership PACs” to collect unlimited “soft money” checks that candidates are prohibited from receiving via their campaign committees and federal Leadership PACs. Much of this money is being used to influence federal elections through phony issue ads that really favor or oppose candidates, partisan voter registration and get-out-the-vote drives, political polling and travel, and transfers of funds to national party soft money accounts.

In passing this important bill (H.R. 4762), which strikes at both the private and candidate-sponsored groups, the House rejected an alternative bill proposed by Republican members of the House Ways and Means Committee. That bill would have coupled needed Section 527 disclosure with provisions that threatened to interfere with other, tax-exempt associations that do not primarily engage in political campaign activities. Americans have First Amendment rights to contribute to groups lobbying on public issues and conducting non-partisan voter registration and educational activities without fear that publicity about their support for certain policies will lead to negative social sanctions.

“The committee bill would have severely trespassed on basic citizen rights of free speech and association by mandating broad disclosure of non-political campaign contributions,” said Steve Weissman, legislative representative of Congress Watch. “In contrast, the reform alternative is narrowly tailored to get at the most egregious and unambiguous affronts to the integrity of our campaign finance laws.”


View Public Citizen’s Report on the Section 527 Group, Citizens for Better Medicare