New 527 group takes aim at campaign contribution limits

The Federal Election Commission (FEC) has agreed to consider the legality of a new 527 organization, SpeechNow.org, which aims to erode key campaign-finance restrictions ahead of the 2008 election.

Active opponents of tighter campaign finance laws formed SpeechNow.org to challenge the legal underpinnings of provisions of federal election laws governing political committees. The group’s members include David Keating, executive director of the anti-tax group Club for Growth; Ed Crane, who founded the libertarian Cato Institute; and Fred Young, the former owner of Young Radiator Co. who sits on Cato’s board of directors. The group’s attorneys work for the Center for Competitive Politics and the Institute for Justice, two organizations devoted to loosening campaign-finance laws. Such regulations, these groups argue, constrain free speech and association rights.

{mosads}The FEC has until late January to issue an “advisory opinion” responding to SpeechNow.org’s request that it be allowed to advocate for or against candidates free of contribution limits imposed on political committees under federal law. In particular, the group wants to run TV ads supporting and opposing candidates on campaign-finance issues during the 2008 election cycle. The ads are already written and its members have pledged contributions, each more than $5,000, to pay for their broadcast.

At issue is whether independent speech groups like SpeechNow.org must organize and register with the FEC as “political committees” subject to donation limitations of $5,000 from individuals. Under current law, any individual may spend as much as he or she wants advocating for or against candidates. But the law bars two or more people from working together and making expenditures to support or oppose candidates.

The group’s charter includes a pledge to accept only individual, not corporate, contributions, as well as a ban on donations to candidates and political parties. By citing this provision, its lawyers are challenging the constitutional basis that the $5,000 contribution limit applies to the organization. They also point out that SpeechNow.org will not contribute to any candidates and refuses donations from corporations and labor unions. Accordingly, they say, there is no risk of corruption — the only justification that the Supreme Court has given in regard to limits on individuals’ political donations.

“We wanted to come up with a group that would create a free-speech zone,” Keating said. “We will be acting completely independent when we speak, so there is absolutely no chance even for the appearance of corruption.”

Keating argues that it makes no sense that the law allows someone like billionaire financier George Soros to spend freely on advocating for or against candidates as long as he acts alone, whereas two less wealthy individuals may not pool their resources to buy ads or direct mail.

“We’re not going to coordinate with candidates or parties,” he said. “Basically, we’re Americans talking to Americans.”

Some Democratic operatives who support loosening campaign finance restrictions also are touting the group’s cause.

Veteran campaign-finance lawyer Bob Bauer, who works for Sen. Barack Obama’s (D-Ill.) presidential campaign, praised SpeechNow.org on his blog twice last week.

 “It would be a mistake to imagine that this challenge has been laid carelessly before the commission, or that SpeechNow.org is smashing itself against a regulatory wall to make an ideological point,” he wrote on his blog, moresoftmoneyhardlaw.com.

However, advocates for more restrictive campaign finance laws are wary of SpeechNow.org. They are concerned that the FEC could rule in its favor, or that the case could end up in the Supreme Court, which also may side with the group.

Earlier this year, the court ruled in FEC vs. Wisconsin Right to Life that the 2002 Bipartisan Campaign Reform Act (BCRA) cannot ban corporate and union money from paying for election ads and communications 30 days before a primary and 60 days before a general election — as long as the ads do not directly advocate for the election or defeat of a candidate or engage in the “functional equivalent” of doing so.

“This is the latest in a series of sophisticated moves by opponents of campaign-finance regulation into the deregulatory direction,” said Rick Hasen, a professor of campaign finance law at Loyola Law School in Los Angeles, who runs electionlawblog.com.

Hasen, who supports BCRA and other campaign finance regulations, worries that SpeechNow.org’s legal argument is well reasoned and could be successful.

 “As a matter of strategy, it’s pretty brilliant,” Hasen said. “In the reform community, this is going to be hard-fought.”