Senate backs campaign finance disclosure; Effort intended to force new soft-money groups to reveal donors, actions


WASHINGTON - The Senate dealt an embarrassing blow to its Republican leaders last night as it supported a drive by Sen. John McCain to force a secretive new class of political groups to disclose donors and campaign activities.

It was the first time the Senate has voted to tighten campaign finance laws since the Republican Party took control in the 1994 elections. The GOP leadership has consistently opposed new limits on political fund-raising.

"This is not the end; it's the beginning," McCain said.

Over the past few years, McCain has built his career, and his unsuccessful bid for the Republican presidential nomination, on a call to rid Washington of the influence of special interest money.

His most ambitious goal has been to ban "soft money" - the unregulated, unlimited contributions that political parties have increasingly used to fuel campaigns. The approval of the measure last night, though far more modest, was still a symbolic and important victory for McCain and other backers of far-reaching campaign finance reform.

The so-called "527" groups targeted by the measure, named after a section of the tax code, have proliferated in the past year. These groups can accept unlimited contributions from any source and can pay for ads during campaigns as long as they do not explicitly oppose or endorse a candidate. Some have been closely linked to politicians, raising concerns that candidates are able to keep their sources of support a secret.

The tally last night appeared to catch Republican leaders by surprise. Along with several other Republicans, Senate Majority Leader Trent Lott asserted that the proposed campaign finance reform would target mostly groups that sound conservative themes.

The McCain measure, the Republican lawmakers argued, would fail to reveal the activities of liberal-leaning labor unions and environmental groups when they engage in political activity under different parts of the tax code.

"This is all about politics," Sen. Rick Santorum, a Pennsylvania Republican, said heatedly. "This is a rifle shot on this bill. This does not cover the unions, this does not cover the Sierra Club."

Those other groups are required to file publicly available tax forms, and not all of them are tax-exempt, as are the kind of organizations targeted by McCain.

"Section 527 is the largest, most disturbing and most pernicious loophole in a system rife with ways to influence government through money," Sen. Charles E. Schumer, a New York Democrat, said during the debate yesterday. "Its effect eats at the very core of our republic."

McCain's proposal was sustained in a 57-42 vote after Sen. John W. Warner of Virginia, the Republican chairman of the Armed Services Committee, challenged its constitutionality. Warner argued that the bill violated the constitutional rule that all legislation involving taxes must originate in the House.

The McCain measure was being considered as an amendment to an unrelated bill that sets priorities for the armed forces next year. Before the vote, Lott had warned that approval of the McCain measure would prevent that key military bill from being passed by Congress.

But 12 other Republicans, including a few conservatives who are facing strong competition for re-election this year, also rejected their leaders' counsel, voting to sustain the McCain bill. Only one Democrat, Sen. Daniel Patrick Moynihan of New York, voted with Warner to strike down the bill.

After the vote, Lott huddled with colleagues, including McCain, to figure out how to proceed. Lott let the amendment be adopted by a voice vote, then withdrew the military bill from consideration. Because of the importance of the military bill, Lott said, he hoped to persuade McCain and other supporters to allow the measure to be attached to a different bill.

Lott said he wanted to negotiate an expansion of the McCain bill to include politically active organizations set up under other parts of the tax code.

After the vote, the bill's chief sponsors - McCain and Democratic Sens. Russell D. Feingold of Wisconsin and Joseph I. Lieberman of Connecticut - said they might offer the bill as an amendment to every bill up for a vote on the Senate floor if Lott does not allow the measure to move to the House for a vote.

While a similar measure has been shot down in the House, Texas Rep. Bill Archer, chairman of the Ways and Means Committee that handles tax issues, is said to be considering a bill to force disclosure of political activities by the "527" groups and others. But Archer is not expected to seek to compel the naming of donors.

The McCain bill would require the groups to submit tax forms to the Internal Revenue Service that would be made available to the public. The groups also would be compelled to list their donors and most expenditures.

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