Senate deals PACs a blow


WASHINGTON - With a near-unanimous vote of approval by the Senate, Congress enacted yesterday the first campaign finance reform measure in more than two decades, requiring disclosure of contributors to tax-exempt groups that now secretly raise and spend money for political activities.

The bill's disclosure requirements will take effect as soon as President Clinton signs the legislation, potentially affecting millions in political cash intended to affect the outcome of the fall elections.

"Passage of this bill proves that public interest can triumph over special interests, and I look forward to signing it as a first step toward meaningful campaign finance reform," the president said in a statement issued shortly after the 92-6 Senate vote.

Clinton added that Congress' resounding decision to expose so-called "stealth PACs," which are playing an increasingly active role in this year's presidential and congressional election campaigns, signaled that a more comprehensive overhaul of federal elections laws may be possible.

Sen. John McCain, the Arizona Republican who has been leading a small bipartisan band of reformers, agreed.

"Today is only a first step, but it is a great first step, and it is indeed a great day for democracy and a government that's accountable to the governed," McCain told his colleagues shortly before they handed him his first victory on a campaign finance issue after years of attempts.

The senator later told reporters he plans to renew efforts for broader reforms, such as banning so-called "soft money" contributions to candidates from political parties, after Congress returns from the July 4 recess.

McCain's unsuccessful bid for the Republican presidential nomination this year is credited with creating momentum for action on the issue that opponents found too strong to resist. The House also voted overwhelmingly in favor of the disclosure proposal late Tuesday night, despite staunch resistance from GOP leaders in both chambers.

"I do not think this is a spear worth falling on, four months in advance of an election," said Sen. Mitch McConnell, the Kentucky Republican who has been McCain's arch opponent on campaign finance legislation.

McConnell, one of the six GOP senators who voted against the bill, contended the measure is of "dubious constitutionality."

But he added, "I would say to my Republican colleagues, particularly those up for election this year, that's a pretty hard argument to explain in a political campaign."

The legislation would apply to so-called 527 groups, named for a section of the tax code that provides tax-exempt status for advocacy groups that take part in political activities, particularly television advertising, as long as they do not specifically urge a vote for or against a candidate.

Among such groups particularly active this year is Citizens for Better Medicare, an organization financed heavily by the pharmaceutical industry, which is running ads attacking legislation that might result in curbs on drug prices - and candidates who support such measures.

The group is spending millions on television ads running in most parts of the country. But under current law none of its donors or expenditures must be disclosed.

Once Clinton signs the bill, which could come within days, the 527 groups would be required to register with the Internal Revenue Service within 24 hours of organizing.

Organizations that raise more than $25,000 would have to file quarterly reports with the IRS, disclosing spending that totals more than $500 and contributions of $200 or more.

Even supporters of the measure call it a modest change. But it is the first legislation of its type to be passed since reforms enacted in the wake of the Watergate scandal in the early 1970s.

The last major congressional action on campaign finance, a clarification of disclosure rules, came in 1979.

McCain won a breakthrough vote on the issue three weeks ago when the Senate voted 57-42 to block an attempt to kill the proposal, which he had offered as an amendment to an unrelated bill. His amendment was then approved by voice vote.

"Eight Republican senators voted with me then who never had supported anything [like this] before," McCain said. "Those eight Republicans had one thing in common, they were all up for re-election. That was the moment. From then on the momentum was almost unstoppable."

House leaders made a valiant attempt, however, to kill it anyway.

They squelched an attempt to bring up McCain's proposal the day after the first Senate vote, in part by promising that similar legislation would be considered this week.

But the bill GOP leaders were promoting was broadened to include labor unions, trade associations, social welfare organizations and other tax-exempt groups that typically support Democrats.

"The left is trying to stamp out our right to free speech for their own political purposes while protecting their big-labor friends and political contributors," protested House Majority Whip Tom DeLay of Texas.

DeLay, who raises money for a 527 group called the Republican Issues Majority Committee that backs conservative congressional candidates, shares McConnell's view that the legislation enacted yesterday is unconstitutional.

Moderate Republicans, including Rep. Michael N. Castle of Delaware, pressed for a vote on the McCain measure, however, and DeLay was forced to yield.

"He figures he'll let them have this vote and that will be the end of it," said a spokeswoman for DeLay, who said Tuesday the whip was under the impression that McCain would not press for further reform legislation this year.

Castle said further efforts this year might be more difficult as a result of passing the 527 bill because "some of the steam has been taken out of our momentum."

It was also unclear yesterday how much impact the bill passed yesterday will have.

Spokesmen for Citizens for Better Medicare and the Republican Issues Majority Committee said their lawyers were reviewing the legislation to determine what they must to do comply.

DeLay predicted Tuesday that the legislation would be challenged in court. Castle said he was confident that political operatives were already looking for loopholes.

Those affected

Legislation approved by Congress only affects political groups that organize under section 527 of the tax code. It does not affect other groups that engage in politics.

A rundown:

Groups that are not touched by the legislation include:

Civic leagues and social welfare organizations, which organize under section 501(c)(4). Includes a wide variety of groups such as NAACP, National Abortion Rights and Reproductive Action League, Right to Life Committee and National Rifle Association.

Labor unions, which organize under section 501(c)(5)

Trade associations and other business groups, which organize under section 501(c)6

For-profit companies

A sampling of section 527 groups affected by the legislation:

Republicans for Clean Air. Funded by a pair of Texas brothers, it ran $2.5 million in ads during the GOP primary boosting Gov. George W. Bush and attacking Sen. John McCain.

Citizens for Better Medicare. Spending millions on TV ads attacking the Democratic Medicare prescription drug plan. Planned to spend $65 million over two years.

Coalition to Protect Americans Now. Running $200,000 in TV ads promoting a national missile defense and criticizing President Clinton and Vice President Al Gore.

Republican Issues Majority Committee. Has ties to House GOP Whip Tom DeLay and aims to raise $25 million to help Republicans running for Congress.

Shape the Debate. With ties to former California Gov. Pete Wilson, aims to raise $1.5 million for anti-Gore ads.

Sierra Club. Spending $8 million on TV and radio ads, mostly aiding Democrats running for Congress and attacking Bush.

-- Associated Press

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