Statement of Senator John McCain on the Introduction of the 527 Reform Act

STATEMENT OF SENATOR JOHN MCCAIN ON THE INTRODUCTION OF THE 527 REFORM ACT

Senator John McCain (R-AZ) submitted the following statement on the 527 Reform Act of 2005 for the Congressional Record today:

"Mr. President, I am pleased to be joined by my good friends and colleagues Senators Feingold from Wisconsin, and Lott from Mississippi, and our good friends who lead the campaign finance reform fight in the House, Representatives Shays and Meehan, in introducing a bill to end the illegal practice of 527 groups spending soft money on ads and other activities to influence federal elections.

"As my colleagues know, a number of 527 groups raised and spent a substantial amount of soft money in a blatant effort to influence the outcome of last year's Presidential election. These activities are illegal under existing laws, and yet once again, the Federal Election Commission (FEC) has failed to do its job and has refused to do anything to stop these illegal activities. Therefore, we must pursue all possible steps to overturn the FEC's misinterpretation of the campaign finance laws, which is improperly allowing 527 groups whose purpose is to influence federal elections to spend soft money on these efforts.

"According to an analysis by campaign finance scholar Tony Corrado, federally oriented 527s spent $423 million on the 2004 elections. The same analysis shows that ten donors gave at least $4 million each to 527s involved in the 2004 elections and two donors each contributed over $20 million.

"In September, we filed a lawsuit to overturn the FEC's failure to issue regulations to stop these illegal practices by 527 groups. President Bush and his campaign filed a similar lawsuit against the FEC as well, and I also appreciate President Bush's support for the legislative effort we begin today on 527s . Today, we are introducing legislation that will accomplish the same result. We are going to follow every possible avenue to stop 527 groups from effectively breaking the law, and doing what they are already prohibited from doing by longstanding laws.

"The bill we introduce today is simple. It would require that all 527s register as political committees and comply with federal campaign finance laws, including federal limits on the contributions they receive, unless the money they raise and spend is only in connection with non-Federal candidate elections, state or local ballot initiatives, or the nomination or confirmation of individuals to non-elected offices.

"Additionally, this legislation would set new rules for federal political committees that spend funds on voter mobilization efforts effecting both federal and local races and, therefore, use both a federal and a non-federal account under FEC regulations. The new rules would prevent unlimited soft money from being channeled into federal election activities by these federal political committees.

"Under the new rules, at least half of the funds spent on these voter mobilization activities by federal political committees would have to be hard money from their federal account. More importantly, the funds raised for their non-federal account would have to come from individuals and would be limited to no more than $25,000 per year per donor. Corporations and labor unions could not contribute to these non-federal accounts. To put it in simple terms, a George Soros could give $25,000 per year as opposed to $10 million to finance these activities.

"Let me be perfectly clear on one point here, Mr. President. Our proposal will NOT shut down 527s, it will simply require them to abide by the same federal regulations every other federal political committee must abide by in spending money to influence federal elections.

"It is unfortunate that we even need to be here introducing this bill today, Mr. President. This legislation would not be necessary if it weren't for the abject failure of the FEC to enforce existing law. As my colleagues well know, some organizations, registered under section 527 of the Internal Revenue Code, had a major impact on last year's presidential election by raising and spending illegal soft money to run ads attacking both President Bush and Senator Kerry. The use of soft money to finance these activities is clearly illegal under current statute, and the fact that they have been allowed to continue unchecked is unconscionable.

"The blame for this lack of enforcement does not lie with the Congress, nor with the Administration. The blame for this continuing illegal activity lies squarely with the FEC. This agency has a duty to issue regulations to properly implement and enforce the nation's campaign laws - and the FEC has failed, and it has failed miserably to carry out that responsibility. The Supreme Court found that to be the case in its McConnell decision and Judge Kollar-Kotelly found that to be the case in her decision overturning 15 regulations incorrectly adopted by the FEC to implement the Bipartisan Campaign Reform Act of 2002 (BCRA). That is why a Los Angeles Times editorial stated that, "her decision would make a fitting obituary for an agency that deserves to die." We are not going to allow the destructive FEC to continue to undermine the nation's campaign finance laws as it has been consistently doing for the past two decades.

"Opponents of campaign reform like to point out that the activities of these 527s serve as proof that BCRA has failed in its stated purpose to eliminate the corrupting influence of soft money in our political campaigns. Let me be perfectly clear on this, Mr. President. The 527 issue has nothing to do with BCRA, it has everything to do with the 1974 law and the failure of the FEC to do its job and properly regulate the activities of these groups.

"As further evidence of the FEC's lack of capability, let me quote from a couple of court decisions which highlight this agency's shortcomings. First, in its decision upholding the constitutionality of BCRA in McConnell v. FEC, the U.S. Supreme Court stated that the FEC had ‘subverted' the law, issued regulations that ‘permitted more than Congress had ever intended,' and ‘invited widespread circumvention' of FECA's limits on contributions. Additionally, in September, a federal district court judge threw out 15 of the FEC's regulations implementing BCRA. Among the reasons for her actions were that one provision ‘severely undermines FECA' and would ‘foster corruption', another ‘runs completely afoul' of current law, another would ‘render the statute largely meaningless' and, finally, that another had ‘no rational basis.'

"Mr. President, the track record of the FEC is clear and, by their continued stonewalling, the Commission has proven itself to be nothing more than a bureaucratic nightmare, and the time has come to put an end to its destructive tactics. The FEC has had ample, and well documented, opportunities to address the issue of the 527s illegal activities, and each time they have taken a pass, choosing instead to delay, postpone, and refuse to act.

"Enough is enough. It is time to stop wasting taxpayer's dollars on an agency that runs roughshod over the will of the Congress, the Supreme Court, the American people, and the Constitution. We've fought too long and too hard to sit back and allow this worthless agency to undermine the law.

"So, Mr. President, here is the bottom line: if the FEC won't do its job, and its commissioners have proven time and time again that they won't, then we'll do it for them. The bill Senators Feingold, Lott and I introduce today will put an end to the abusive, illegal practices of these 527s. .

"I urge my colleagues to support swift passage of this bill and put an end to this problem once and for all."

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