From the Chicago Sun-Times

Ads skirt campaign finance laws
August 24, 2004
BY LYNN SWEET WASHINGTON BUREAU CHIEF
It's the scam of the 2004 presidential campaign. The emergence of new
political groups this election cycle -- such as the Republican-funded Swift
Boat Veterans for Truth and the Democratic-bankrolled America Coming
Together and the Media Fund -- showcases how political money, like water
running downhill, finds loopholes to exploit in federal election and tax
laws.These organizations were spawned specifically by Democratic and Republican
activists to influence the November election, mainly through advertising.
By pretending to be independent non-party entities, rather than advocates to
elect either the Republican incumbent President Bush or Sen. John Kerry, the
Democratic nominee, these groups get out of complying with a bunch of rules
designed to drain some money out of politics.
On Monday, Bush said these organizations are "bad for the system,'' with his
comments coming after Kerry accused the Bush campaign last week of using the
anti-Kerry veterans group as a front to attack his combat record. The Bush
campaign denied the charge.
Kerry's campaign filed a complaint Monday with the toothless Federal
Election Commission alleging the Swift Boat group is a "sham organization''
funded by brazen "Republican operatives who are helping to finance and run
Bush's campaign.''
This year marks the significant emergence of these political groups that are
not officially part of the Democratic or Republican parties or formally
associated with the Bush and Kerry campaigns.
They are often referred to as "527s,'' a shorthand that evolved because it
is section 527 of the Internal Revenue Service code that governs how these
groups operate.
These outfits exist to fill the void created when new campaign finance laws
became effective for this election, the result of legislation championed by
Sen. John McCain (R-Ariz.) and Sen. Russ Feingold (D-Wis.)
When Bush signed McCain-Feingold into law in 2002, political parties were
banned from taking what is called soft money, unlimited donations from labor
unions, corporations and wealthy individuals. What is known as hard money
can be contributed by individuals only in limited amounts and cannot be
given by companies and unions.
Democrats first understood the potential of using 527s to collect soft
money. A lot of heat was generated by Republicans when it became known that
ACT and the Media Fund were financed in the beginning by millions of dollars
from Democrat George Soros, the financier.
Republicans finally understood their own potential and jumped in; according
to the non-partisan Center for Responsive Politics and reports in the New
York Times, the money for the Swift Boat Veterans for Truth came from major
GOP donors with ties to Bush and his associates.
If you seem to be hearing a lot about 527s in the past week, it is because
Kerry roared back at Bush and the Swift Boat offensive during a speech last
Thursday, calling the Swift Boat Veterans' ads a "smear campaign.''
"It hopped from a cable phenomenon to the network last week, when Kerry took
it on in his speech,'' Kerry campaign senior adviser Michael Meehan told me.
Among the issues to consider in this unfolding story:
*The crux of the Kerry FEC complaint is the allegation of specific banned
coordination between the Swift Vote group and the Bush re-election campaign.
*That is separate from other complaints filed by Democracy 21, the Center
for Responsive Politics and the Campaign Legal Center against GOP and
Democratic 527s. These shadow political groups "have been illegally spending
tens of millions of dollars in soft money to influence the 2004 presidential
elections,'' said Democracy 21 president Fred Wertheimer.
*The FEC voted recently to make it harder for the scam to work -- in 2006
elections. And the IRS on Friday issued a warning to 527s to behave.
*Don't count on the FEC to do anything. Said Wertheimer, the agency "has a
track record of turning a blind eye to illegal campaign activities.''