Hearing of the Senate Rules and Administration Committee

HEADLINE: HEARING OF THE SENATE RULES AND ADMINISTRATION COMMITTEE

SUBJECT: THE SCOPE AND OPERATION OF ORGANIZATIONS REGISTERED UNDER SECTION 527 OF THE INTERNAL REVENUE CODE

CHAIRED BY: SENATOR TRENT LOTT (R-MS)

LOCATION: 301 RUSSELL SENATE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES: PANEL I:

SENATOR RUSSELL FEINGOLD (D-WI);

SENATOR JOHN MCCAIN (R-AZ);

PANEL II:

LAWRENCE NOBLE, THE CENTER FOR RESPONSIVE POLITICS;

PROFESSOR EDWARD B. FOLEY, MORITZ COLLEGE OF LAW, OHIO STATE UNIVERSITY

BODY:
SEN. RICK SANTORUM (R-PA): Thank you, Mr. Chairman. Mr. Chairman, I find myself in the odd situation of-as most of my colleagues would say, I am not always right but I'm always certain. And in this case I don't know whether I'm right or certain, and I'm very conflicted in this whole debate. I was not a fan of McCain- Feingold. I believe that people should have the right to speak and that we shouldn't be limiting people's contributions. I'm not for contribution limits period. We don't have them in Pennsylvania, the system works pretty well in Pennsylvania, in my opinion.

People can contribute whatever they want, it's fully disclosed and it's fully transparent. To me that's the whole issue, that people know who's giving to home. And the more we try to limit what candidates get directly and now parties, what they get directly, the more the transparency and disclosure becomes marooned from the public and we really don't know who's influencing whom. And I think that's where we are at this point with these organizations.

We have now driven the money away from the candidates. We've driven it away from the parties, which are out there before the public eye and are very clear about what they believe in to these little organizations that have a post office box somewhere or maybe an office in some little building here in Washington DC and they're the ones with all the money. And we don't know who's giving them the money and we don't know how they're spending it necessarily, and we're wondering whether we want to regulate them too.

I've got to tell you, you know, I was concerned about this from the very beginning. I agree with Senator Lott, I think weakening political parties is not a good thing for America. I see in the state of Illinois seven millionaires running for the Senate. This place is going to be an aristocracy even more than it has been in the past if we continue to allow the average, ordinary person in America the opportunity to be able to go out and raise the resources necessary to compete. So I throw-and I-since-very, very upset about what's going on here and I think we're seeing the consequences.

So I just want to, I guess, make my opening statement for the record as to this is something that I anticipated would happen. There's always a loophole. We can keep closing loopholes but the money is going to pop out somewhere, and in this case it's popped out of 527. I find it, candidly, very remarkable that the very party who was the principal advocate for banning soft money are the ones who rushed the most quickly to set up organizations to use soft money.

That would be the Democrats, who made soft money to be this pariah that is infecting our political system. And yet, they're the ones setting up organizations and spending tens of millions of dollars in soft money to influence the election process, when somehow or another if it was given directly to political committees it was a bad idea. And now we're saying, well, whether we should limit this or not limit this, I don't think is really the point.

I would just want to, I guess, ask a question and following along with what Senator Dodd had to say. You have these committees who say, well, you know, if they're an issue oriented committee they can spend money, but if they're not an issue oriented committee they can-they don't-they can't spend money to influence federal elections. What's the difference? Why does that matter?

SEN. SANTORUM: I'd just make one more comment. Yes, political committees are raising more hard money, but it's costing them a lot more money to raise that hard money. I mean, the people who have really made out on this as far as-well, a lot have. But one group are fundraisers. They, you know, direct mail houses and a lot of other folks are making a lot more money because we're having to raise the money in a lot smaller increments than we had before. Maybe that's a good thing.

It certainly helps the economy in some respects, so that would-Professor, do you have any-can you answer the question to me? I'm not too sure you know, all due respect, you answered the question. I understand from what you said, you know, the law says, well, you know, there's a difference. I'm asking sort of in a broader philosophical context what's the difference?

MR. NOBLE: The difference --

SEN. SANTORUM: Let Professor Foley have a whack at it.

MR. FOLEY: Thank you, Senator. I think what the law is aiming at-and it is a premise of the McConnell decision, and I understand from your remarks that obviously there's a view that takes issue with that premise. But the premise is that groups that are dedicated to winning elections, like political parties on the one hand or political committees on the other hand, because they are-elections are their reason for being, are potentially the focus, unfortunately, of the kind of inappropriate undue influence in terms of the contributions that some groups or people, the so-called soft money donors, want to give to those groups in order to --

SEN. SANTORUM: Are you suggesting that there are large soft money donors who don't want to give a lot of money to National Abortion Rights Action League to run ads against candidates to defeat them in their election?

MR. FOLEY: I'm not suggesting that, and that-the key point I think in grappling with this is the balancing that occurs under the First Amendment. There are some risks associated with either independent spending by an individual person, or again contributions to an interest group that is not an election focus group but an issue focus group. But the risks are lower on that side of the balance because they're an issue group not dedicated to winning elections.

SEN. SANTORUM: What risk is lower?

MR. FOLEY: The risks of being exploited for improper purposes.

SEN. SANTORUM: Who's being exploited for improper purposes?

MR. FOLEY: The group is being used and the evidence --

SEN. SANTORUM: The group is being used? You think someone who gives NARAL $10 million, you think NARAL feels abused by having that money sent to them? Do you think they're being exploited so they're getting money to be able to put ads on television to promote their cause?

MR. FOLEY: Well, maybe if I could phrase it a little bit differently? It's that --

SEN. SANTORUM: I think you'd better.

MR. FOLEY: That the concern is that a donation, a large dollar donation, to a political party on the one hand or a political committee on the other hand is going to incur a debt, a beholden-ness in terms of a successful candidate, and --

SEN. SANTORUM: To whom? From whom to whom?

MR. FOLEY: It's the connection between the donor and ultimately the candidate who becomes the officeholder.

SEN. SANTORUM: The candidate isn't involved in any of these committees, so why-are you suggesting that-I don't know who America Coming Together is. Let's take America Coming Together, that somehow that if-let's pick-you know, George Soros. He gives $20 million to America Coming Together that-or if he gives $20 million to NARAL, what's the difference?

MR. FOLEY: Well, there's two differences, and another important difference is on the free speech side of the balance. The Supreme Court has recognized that there are greater First Amendment protections with respect to the primarily issue oriented group and the contributions that are given to them and the spending that they make. So you have to look at both sides of the balance at the same time.

SEN. SANTORUM: But if he's given $20 million to put on television, what's the difference whether they're an issue oriented group that cares about abortion or an issue oriented group who cares about a whole bunch of issues? Obviously these folks just don't hate Republicans because they're Republicans, they hate them because-or work-hate is not the proper word, but they want to work against them because they disagree with them on a whole variety of issues. Or there may even be one issue, they just don't state it. So what's the difference?

MR. NOBLE: Senator, I think the difference is their purpose, why they're doing this and explicitly what they're doing. And as Professor Foley said, really what you're dealing with here is interests on both sides of the equation. You're dealing with the First Amendment interest and you're dealing with what the Supreme Court has recognized is the compelling governmental interest in stopping real and corruption that comes from the influence of large donations or corporate or labor donations. And in those instances what Congress --

SEN. SANTORUM: I'm talking about the same dollar donation to two different groups.

MR. NOBLE: And where the --

SEN. SANTORUM: What's the difference?

MR. NOBLE: The difference is what the groups do with that money.

SEN. SANTORUM: Well, let's assume they both spend it on television.

MR. NOBLE: And then you have to ask what are the ads on television doing and what's the purpose of the group? If the purpose of the group is to promote an issue, and that may-and it's all they do is promote that issue, then you're dealing with very different interests than you are dealing with a media fund which will take out an ad that attacks President Bush and effectively tells the country why he is bad for the country. You're dealing with two different interests there and you're dealing with two different types of potential corruption. And the Supreme Court has recognized in the case where you're dealing with the candidates and affecting the elections, there is a greater potential for corruption and your First Amendment interests may be less than when you're dealing with pure-giving money to pure issue groups.

SEN. SANTORUM: I can guarantee you that when National Abortion Rights Action League runs ads against me, that they are doing so to defeat me in an election. No different than America Coming Together is trying to defeat George Bush in this election. I candidly do not see the difference-not that I'm necessarily against either being allowed to do. I'm again on the other side of this issue.

I believe everybody should be able to get out there and run television ads and the people have a right to speak. But I think what we're doing here is drawing artificial lines and I think at least-I might be wrong. I don't know if anybody here feels that this is a very clear issue as far as what the difference is between these organizations other than one spends-other than just spending all their money on political activities they spend some of their money on non-political activities.

So that's really the only test, right? As long as they're doing something else other than just spending it on political activities. They could have the same-they could be running the same ads. But if all one does is political, and one does political and something else, they're protected.

MR. NOBLE: Not necessarily. If NARAL runs an ad 30 days before primary, 60 days before your general election, runs it as a broadcast ad in Pennsylvania they have to use hard money for that if they mentioned your name. So they're under the same rules when they get that close to election activity.

SEN. SANTORUM: I understand. Obviously we're not talking about that. We're talking about ads before that period of time, that's where this money's being spent. It's not going to be spent 30 days. You know that as well as I do so let's talk about what's really happening out there. What's really happening out there are big money expenditures from soft money donors going to groups whether they're purely political or partly political, and they're being spent 60 or 30 days before the election and I'm trying to ask you-tell me what the difference is?

MR. NOBLE: The difference is that the interest-the Supreme Court has recognized a greater interest in regulating a group who's primary purpose or major purpose is influencing elections versus a group that's not their major purpose.

SEN. SANTORUM: All I'm suggesting is what you're telling me is that the difference is if I'm a group that spends a bunch of money on, you know, lobbying Congress and then spends another bunch of money on television ads trying to influence election I'm okay, but if all I'm doing is running television ads I'm not okay.

MR. NOBLE: I'm sorry-and one reason --

SEN. SANTORUM: And all I'm trying to say is where's the-I don't understand the public interest in prohibiting one and not the other and nothing that you have said to me has given me any indication that I should feel better about the situation because there is this distinction.

MR. NOBLE: I just need to add-the distinction-in one sense others have agreed with you in that the law at one time, people thought the law should have been broader and cover all that. But --

SEN. SANTORUM: I'm not advocating that.