In the News
Forbes: A Cheer For SEC Chairman Mary Jo White And Good Government
By Bradley A. Smith
SEC Chair Mary Jo White deserves kudos for refusing to let the agency be yanked into this fiasco. Normally one would write, “I can only imagine the pressure she was under.” In this case, however, I know the pressure she was under, because I’ve had a similar experience.
In 2004, I was Chairman of the Federal Election Commission. After President Bush cynically signed the McCain-Feingold campaign finance law in 2002, Republicans believed the law would be declared unconstitutional. Democrats, however, set about establishing a network of non-party organizations that would effectively allow them to raise and spend money outside the law’s restraints. These organizations, such as Americans Coming Together, and others, called “527s” – were largely exempt from the law.
When the Supreme Court upheld McCain-Feingold in December of 2003, Republicans and the Bush campaign realized that they had been caught flat-footed. The Bush presidential campaign then demanded, on the flimsiest of legal theories, that the FEC regulate these Democratic-oriented 527s. Enormous pressure was placed on the FEC to act. Though the general perception was that such regulation would harm the President’s Democratic rivals, Democratic Commissioner Scott Thomas was widely expected to (and eventually did) vote for the regulation, based on his principles favoring extensive regulation of such political activity. Thus, if the 3 Republican Commissioners would vote for regulation, the Bush campaign thought it could silence the Democratic-oriented 527s.
Daily Caller: The IRS’s Thanksgiving turkey: More non-profit restrictions
By Eric Wang
What are some of these activities that advocacy groups will now have to be wary of? One would be grassroots lobbying efforts on pending legislation. Another would be holding a non-partisan candidate debate 30 days before a primary or 60 days before a general election. Apparently the IRS believes informing the citizenry about legislation or candidates fails to fall within social welfare groups’ mission of benefiting or educating society. Yet, under the IRS’s existing rules, which would still apply to charities under the proposal, those organizations could continue to hold debates without time restrictions, even though charities are supposed to have fewer political rights than advocacy groups due to the tax deductibility of their donations.
While you chew on that regulatory fruitcake, note that the proposed rules would also place voter guides and voter registration and get-out-the-vote (GOTV) drives into the danger zone for advocacy groups, regardless of whether they benefit any candidates or political parties. Once again, the IRS permits these activities for charities. To the extent anyone actually objects to advocacy groups engaging in these activities, the IRS would merely be shifting these programs to charities. Of course, the IRS also could choose simply to shut down these activities for all non-profits alike, and given the agency’s recent ham-handedness, that is not inconceivable. In which case, look forward to more voter guides brought to you by Exxon-Mobil or Halliburton.
Daily Beast: Political Corporate Contributions Won’t Be Aired in Daylight
By Adam Winkler
The SEC may have been persuaded by the arguments of those, like the Chamber of Commerce’s Blair Latoff Holmes, who insisted the SEC had no business regulating political spending. “Campaign finance reform is not, has never been, and should never be a function of the SEC,” according to Holmes. Brad Smith, of the Center for Competitive Politics, a group opposed to campaign finance reform, said the SEC’s proper focus is “protecting investors and regulating capital markets” not “campaign finance law.”
CCP
Group Offers Alternative for New IRS Rules on Non-Profits’ Political Activities
The proposed IRS rules “suffer from significant flaws,” according to the comments, which were submitted by CCP Chairman and former FEC Chairman Bradley Smith and CCP Legal Director Allen Dickerson. Smith and Dickerson write that the IRS proposal “regulates far more speech than can be justified, under either administrative law or the First Amendment, given Supreme Court precedent over the past several decades.”
“The IRS should not be regulating political speech at all,” said Smith. “It is a tax collecting agency, not a campaign finance regulator. As noted in our comments, if an entity with a social welfare purpose is a PAC under Federal Election Commission rules, it ought to be regulated as a Section 527 organization. If it is not, it should be regulated as a Section 501(c)(4) social welfare group.”
The comments submitted by Smith and Dickerson note that “This straightforward approach would harmonize the IRS’s rules with those of the Federal Election Commission, the body entrusted by Congress with ‘exclusive jurisdiction’ for civil enforcement of the nation’s campaign finance laws…. [This] approach offers real clarity without dragging the IRS further into the thicket of political regulation, a tangle from which it—and the Service’s reputation for the neutral, nonpartisan collection of revenue—may never recover.”
Comments on IRS NPRM, REG-134417-13
As a threshold matter, CCP questions whether the IRS should be engaged in the minutiae of regulating political or politically-related speech at all. If an entity with a social welfare purpose is a political committee (“PAC”) under federal or state law, it ought to be regulated as a 26 U.S.C. (“IRC”) §527 organization. If it is not, it should be regulated under 26 U.S.C. §501(c)(4). This straightforward approach would harmonize the IRS’s rules with those of the Federal Election Commission, the body entrusted by Congress with “exclusive jurisdiction” for civil enforcement of the nation’s campaign finance laws. 2 U.S.C. §437c(b)(1). This approach would recognize that in a democracy, political education not only should but must fall within the definition of “social welfare” and “educational” activities that constitute exempt activities under §501(c)(4). Nothing in the statute requires exclusion of these functions from the definition of social welfare. Finally, and most importantly, this straightforward approach offers real clarity without dragging the IRS further into the thicket of political regulation, a tangle from which it—and the Service’s reputation for the neutral, nonpartisan collection of revenue—may never recover.
Independent Groups
Wall Street Journal: Is William Wilkins Whitewashing IRS Targeting?
National Review Online media editor Eliana Johnson on the IRS chief counsel’s Congressional testimony on tea-party targeting. Photo: Illinois Institute of Technology
More Soft Money Hard Law: Selling the American Anti-Corruption Act
By Bob Bauer
This is a bold claim that the sponsors of the American Anti-Corruption Act have made. Perhaps “bold” is the wrong word; “audacious” might be more accurate. The sponsors declare that the adoption of their proposal will “completely” reshape American politics and that it will be “completely transformative” in giving the people a voice in their government.
There is much to discuss here, but the first question is how the sponsors make the case for their plan. The plan’s various provisions are by and large familiar—such as additional disclosure requirements, revolving door restrictions and public financing—but the sponsors claim that these parts have been stitched together into an omnibus package with sweeping effect and little risk of constitutional objection from the courts, “even…the current Supreme Court.”
Candidates, Politicians, Campaigns, and Parties
Washington Examiner: Elizabeth Warren threatens companies she suspects of funding public criticism of her
By TIMOTHY P. CARNEY
I’m generally for more disclosure in campaign finance, but the best argument against requiring full disclosure by groups engaged in political speech is that politicians sometimes retaliate against their critics. Sen. Elizabeth Warren inadvertently made that very argument this week.
As told by Ben White at Politico, a group called “Third Way” criticized Warren. Warren apparently suspected that Third Way’s criticism of her was funded by banks. So she wrote a letter to bank CEOs demanding they disclose which political groups they’re funding.
Lobbying and Ethics
Roll Call: Partying Within the Rules | K Street Files
By Kate Ackley
Hide the silverware. Stow the dinner plates. And definitely keep that 100-year-old cognac corked.
This is how K Street gets ready for a holiday shindig in the age of the Capitol Hill party police.
State and Local
District of Columbia –– DCist: Council Unanimously Approves Campaign Finance Reform Legislation
By Matt Cohen and Sarah Anne Hughes
In addition to approving a minimum wage hike Tuesday, the D.C. Council also unanimously voted to pass a campaign finance reform bill.
The legislation, which was introduced by Councilmember Kenyan McDuffie (D-Ward 5), will tighten D.C.’s campaign finance laws, specifically by restricting campaign contributions from related businesses, closing the LLC loophole, and requiring campaigns to report all fundraising data online for the Office of Campaign Finance to publish publicly. Additionally, the bill mandates campaign finance training for candidates, boosts the range of penalties for violations, and restricts money order donations to $100. The legislation would also require lobbyists to disclose any contributions bundled and forwarded to a campaign.
Maryland –– Baltimore Sun: Mizeur to accept public financing
By Michael Dresser
Democratic gubernatorial candidate Heather R. Mizeur will announce Wednesday that she will become the first contender for that office since 1994 to accept public financing of her campaign — effectively limiting her spending on the primary to about $2.5 million.
Mizeur, a two-term delegate from Montgomery County, will announce her decision as part of her roll out of a broad proposal to curb the influence of special interests on elections. Among the provisions will be replacement of Maryland’s current, limited financing scheme with a comprehensive system.
