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In the tightly contested 2004 Presidential race, organizations known as 527s (named after the section of the IRS Code under which they are organized) are spending millions of dollars to influence the outcome of the election. Unfortunately, 527s are currently not subject to the reporting requirements and contribution limits which apply to all other political groups, despite the express organizational intent of all 527s to influence the outcome of elections. This nonsensical incongruity has allowed 527s to accept contributions in the millions of dollars from wealthy individuals to run ads tearing down one candidate or the other. Different Rules for Contributions
In 1974, as part of the post-Watergate reforms, Congress instituted contribution limits for federal races. Per race, an individual could give $1,000 to a candidate, while political parties and committees could give $5,000 to a candidate. Aggregate individual contributions to all federal races were limited to $25,000 per year. While $1,000 was completely out of the range of most Americans, it did restrain the ability of super-wealthy donors to influence elections with contributions in the hundreds of thousands or even millions of dollars. In 2002, despite the fact that the overwhelming majority of Americans still could not afford to give a candidate $1,000, Congress doubled the individual limit to $2,000 per election and raised the aggregate to $95,000 every two years, roughly equivalent to the median household income in the United States. Again, these limits did not level the playing field for regular Americans to take part in the political process to the same extent as wealthy folks, but they did limit the ability of the super-rich to use their wealth to dominate our process of elections through huge contributions. The use of 527 groups by millionaires and billionaires has restored their ability to give big money to influence elections in the United States, in conflict with both the spirit of federal campaign finance laws and the fundamental principles of democracy. Using the latest reports (filed in July 2004): - The top three individual donors to 527s in the 2004 election
cycle have contributed a combined $34.9 million. Corporations and unions have joined wealthy individuals in taking advantage of the 527 loophole, allowing them too to pour millions of dollars towards influencing elections which otherwise would be illegal. Poor Disclosure A brief look at the filings of one 527, Progress For America Voter Fund ("the Fund"), highlights how infrequent disclosure requirements allow 527s to pile up huge amounts of cash from unknown contributors. In its July 13, 2004 Form 8872 filing with the IRS, the Fund reported $2,266,810 in contributions. By late August, although he was not required to do so, its president was reporting that the Fund had raised $35 million, had received a large number of pledges for further contributions, and was planning a $125 million advertising campaign through Election Day. Voters may not be able to tell who all the new contributors are who are backing the Fund until its October filing, making it very difficult for voters to evaluate ads they saw two months earlier in light of who the group's contributors are. Similarly, if a corporation or union wanted to give millions of dollars to 21st Century Democrats on October 22 to finance a huge last-minute direct mail or newspaper ad campaign, voters would have limited opportunity to tell who was backing the ads before the election, and thus be hard pressed to incorporate that information into their decision on Election Day. In both situations, it is voters who lose. Top 527 Committees The following are the 527 Committees which have raised the most money in 2003-4, using data obtained from the Center for Public Integrity on Sept. 16, 2004. The 527 Joint Victory Campaign 2004 is not listed because to do so would result in double counting with other 527s. The data is based on reporting as of July 2004, so other 527s may have since raised millions of dollars more, as noted above.
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