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Heard of soft money? Meet squishy money

June 12, 2000
Web posted at: 1:08 PM EDT (1708 GMT)

By Viveca Novak

(TIME.com) -- It looked like evidence for the proposition that this isn't a do-nothing, gridlocked, impossibly partisan Congress after all: On Thursday evening the Senate voted to pass a tiny piece of campaign finance reform legislation, an amendment attached to a defense authorization bill that would force a new slew of tax-exempt political groups to disclose who's giving them money, how much, and how the funds are being spent.

The vote, which drew support from 14 Republicans, several of them in close reelection races, surprised even the measure's sponsors, including Republican John McCain and Democrats Joe Lieberman and Russ Feingold. All three are cosponsors of a more sweeping campaign-finance reform measure that falls to repeated GOP filibusters.

But if those who want a little sun to shine into the crannies of these secretive groups could get around Trent Lott, the Senate majority leader who opposed the provision, they couldn't maneuver around Tom DeLay, the House Republican whip who has close ties to three such outfits. On Friday a House measure similar to the Senate's went down 216-202.

Forget, for the moment, soft money. Forget foreign contributions, undercover state-level political actions committees and all the other cascading perversions of post-Watergate election-reform law. Each year those laws have grown more distorted, yes. But this year's proliferation of groups that have essentially no boundaries is the most brazen subversion yet. (See below for a partial list.)

McCain discovered firsthand the damage these groups can do when one called Republicans for Clean Air popped up on the airwaves just before the Super Tuesday primaries this year, spending more than $2.5 million in New York, Ohio and California to slam McCain's environmental record and laud Bush's. The funders of the group soon stepped forward, although no law required them to: Sam and Charles Wyly, Texas businessmen who are buddies with and financial backers of George W. Bush. McCain filed a complaint with the Federal Election Commission, alleging that the group did one of the few things it's not allowed to do: coordinate with the candidate who's benefiting from its work. McCain says he's "positive" the Bush camp coordinated with the Wyly group and others that attacked him, though he has no smoking gun.

DeLay's groups include one, the Republican Majority Issues Committee, that plans to spend $25 million getting out the vote in battleground House districts. The Republicans' House campaign committee transferred $500,000 to one of DeLay's groups last fall. DeLay's fund-raising tactics for the groups -- his nickname is "The Hammer" -- have prompted a racketeering suit filed by the Democrats' House campaign committee alleging that DeLay's m.o crossed the line into illegality. It's an unconventional use of the racketeering statute -- election lawyer Ken Gross calls it a "misuse" and a "nonstarter" -- but points up the difficulty of getting to these groups through election or tax laws, from which they are virtually exempt.

Organizations like the Sierra Club use the tax loophole that allows these groups to exist in the shadows for some of their work. But for some reason, the vast majority of the more than two dozen such groups that exist are conservative. Another example: the Coalition to Protect Americans Now, which is funded by conservative Superglue heiress Helen Krieble. The group's ads questioning whether the administration has done enough to protect the U.S. from missile attacks came out just prior to Bush's foreign policy initiative proposing more reliance on a strong missile defense shield, though both camps say it's just coincidence. Krieble's foray into the ad world is apparently just a shadow of what she plans in the months before the election.

Last month the Federal Election Commission met to consider a proposal requiring these groups, called 527s for the section of the tax code that allows them to organize, to register their contributions and expenditures. But Republican opposition will likely kill the initiative. As it might in Congress: The House leadership, under pressure from moderates and lawmakers in close races back home, promises a vote within a month on a disclosure measure more to its liking -- but it will include disclosure requirements for groups like labor unions and trial lawyers, which they know would be poison pills for Democrats.

This week's surprise turn of events in the Senate may stand alone for some time.

A partial list of the secretive election-funding groups, known as 527s, that have sprung up this campaign season:

527s tied to members of Congress:

Americans for Economic Growth (Tom DeLay (R))

The U.S. Families Network (Tom DeLay)

Republican Majority Issues Committee (Tom DeLay)

Saving America's Families Everyday (JC Watts (R))

Other active 527s:

Business Leaders for Sensible Priorities (Ben Cohen of Ben & Jerry's Ice Cream)

Christian Coalition

Citizens for Better Medicare (pharmaceutical industry)

Citizens for Reform (Triad Management Services)

Citizens for the Republic Education Fund (Triad)

Citizens for the Republican Congress (former Rep. Pat Saiki, R-HI)

Club for Growth (conservative Republicans, focuses on taxes)

Committee for New American Leadership (Newt Gingrich)

League of Conservation Voters

Peace Voter Fund

Republican Leadership Coalition (former Bob Dole campaign manager Scott Reed)

Republicans for Clean Air (Bush backers Sam and Charles Wyly)

Shape the Debate (former Calif. governor Pete Wilson (R))

Sierra Club

Copyright © 2000 Time Inc.

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