527 Is Magic Number For Cash-Strapped John Kerry Campaign

Organizations sidestep financing rules to raise soft money for Democrat.

It's April. Birds are chirping, flowers are blooming, and politicians are rolling into your town, asking for votes and cash — lots of cash. They're on television, on the Web, at fancy dinners and outside of your student union. It seems that you actually should be seeing less of them, since Congress, via the McCain-Feingold campaign finance legislation, recently put the squeeze on huge donations from wealthy contributors.

But did they? Organizations known as "527s," so called for the section of the tax code under which they form, are one way around the new rules, and they're raising soft money to indirectly support Senator John Kerry's presidential campaign.

The McCain-Feingold act, passed in the fall of 2002, was designed to prohibit political parties and candidates from raising soft money. In short, the difference between soft money and hard money is simple: hard money accounts for all contributions donated to candidates from individuals, who can give up to $2,000, while soft money has no dollar limit and is generally donated by corporations, unions and wealthy individuals. Where candidates are allowed to spend hard money on anything campaign-related, the sole purpose of soft money is to support party activities at a grassroots level, including "get out the vote" drives, bumper stickers and "issue ads."

In 1996, however, the parties found a loophole and utilized soft funds to create ads extolling a presidential candidate and condemning his opponent. Obviously, the mud began to fly like never before.

But in 2002, the clean-up crew of Senators John McCain and Russ Feingold stepped in and pushed a campaign-finance-reform bill through Congress designed to eliminate soft money. That meant candidates were back to relying on hard money, which left Kerry and the Democrats with a big problem: With each campaign expected to spend well over $100 million this year, raising that money in increments of $2,000 would take, well, a really long time.

President Bush has had years to build his network of individual, small-time contributors. The Bush campaign has divided its fund-raising club into three categories: Rangers (those who raise more than $200,000), Pioneers (Republicans who collect at least $100,000) and Mavericks (young Republicans who bring in up to $50,000). Each team hits up wealthy friends and colleagues, encourages them to give the maximum hard-money donation of $2,000, and then hands over a bundled contribution to the Bush-Cheney campaign. More than 98 percent of President Bush's $158 million coffer comes from individual donations of this kind.

While an incumbent has the advantage of raising money during his time in office, the challenger isn't even decided until a few months before the election. So even with his personal millions, Kerry still has a lot of catching up to do. Add to that the restriction on soft money, which used to allow candidates to raise tens of millions of dollars from a small number of wealthy contributors — and you're looking at a dim prognosis for the Democratic challenger.

The 527s have changed all that. They're prohibited from coordinating with a candidate or naming a candidate in any advertising; theoretically, 527 groups are only allowed to influence the political agenda through advertising and voter registration. But groups such as MoveOn.org and America Coming Together have taken advantage of the fact that they're not regulated by the Federal Election Committee, and they're collecting vast sums of money to spend on anti-Bush ads. Though they may not be mentioning Kerry, they're definitely not doing the Bush campaign any favors. The ad that uses the line "Guess who's going to pay off President Bush's $1 trillion deficit?" (and depicts children working menial jobs) came from MoveOn.org.

Billionaire George Soros has already donated $10 million to ACT and $2.5 million to MoveOn.org. These organizations, along with the Joint Victory Campaign, America Votes and other 527s are helping Senator Kerry to draw level with President Bush by financing ads in Pennsylvania, Florida, Arizona, Michigan, Ohio and 13 other states. These groups have also coordinated their efforts to maximize effectiveness: ACT is in charge of get-out-the vote efforts; the Joint Victory Campaign is deemed a combined fund-raising committee; America Votes works on progressive organization activities; and the Thunder Road Group is committed to research and rapid response.

The 527s "are nothing but an attempt to get around the law," said Phil Noble, a former U.S. Senate analyst and founder of Politics Online. "The whole campaign-finance system is corrupt and rancid. It's bad for voters and bad for politicians. Five twenty-sevens are just the latest iteration of that stink pile."

As Democrats continue to benefit from 527s, Republicans have decided that their head start in fund-raising is large enough to allow them to take the moral high road. On April 1, the Bush-Cheney campaign filed a complaint with the Federal Election Committee to cut the flow of soft money to 527 groups. They argue that Kerry's campaign is illegally benefiting from the organizations and violating the law that prohibits using soft money in coordination with federal candidates. The FEC's process makes it unlikely that the matter will be resolved before the November election, so the RNC is asking the FEC to briefly reflect on its complaint and dismiss it so that the RNC can go to federal court, which could conceivably result in the 527 groups being asked to stop their activities immediately. Even though the RNC has opted out of the 527 game, Republican spokespeople have said that if the groups are deemed legal by the FEC, they too will join in on the strategy.

With months to go before the election, 527 groups have brought in more than $60 million and have ample time to find even more ways to spend it. Until someone decides otherwise, the game rolls on.

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