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Thursday, Feb. 19, 2004

The commission voted 4-2 Wednesday to place some restrictions on outside political groups that register with the FEC, a ruling that will limit how they can use corporate and union contributions for election activities.

The FEC put off decisions on several larger issues, including whether the limits should apply to groups that do not register with the commission but are involved in elections. Campaign finance watchdogs call many of the new organizations "shadow groups" and contend they are trying to keep soft money flowing into federal elections despite the new law.

The commission will consider the question of whether limits should apply to such groups next month in a formal rule-making process that could determine how much special-interest money flows into the elections.

Democrats Attack Their Own 'Reform'

Democrats hope to use the outside groups to conduct get-out-the-vote drives and other activities their party used to have soft money to finance, and to make up some of the financial advantage Republicans have enjoyed under the campaign finance law that took effect after the 2002 election. The GOP raises millions of dollars more in the smaller donations the law permits than the Democrat party does.

How far Wednesday's decision reaches is under debate.

Harold Ickes, raising millions of dollars in large individual donations to run ads promoting the election of a Democrat president, said he didn't believe the ruling affected his group because it wasn't under the FEC's jurisdiction.

Republican National Committee Chairman Ed Gillespie, who has been pressing the FEC to limit soft-money election spending, said the decision shut down illicit groups "that operate in the shadows by using unregulated soft money to influence federal elections."

Ellen Weintraub, a Democrat commissioner, said the ruling left plenty of flexibility for partisan groups to collect and spend soft money: corporate, union and unlimited donations.

"You can't stop the flow of money," Weintraub said.

At issue is how the nation's new campaign finance law, which banned national party committees and federal candidates from soliciting soft money, affects interest groups still raising the big checks.

Weintraub said the FEC's decision affected only political groups registered with the commission and collecting limited individual donations known as hard money, which they can use for direct candidate support, such as ads calling for someone's election, and also raising soft money, donations they can use only for more limited purposes.

Groups typically must report to the FEC as political committees if they are contributing to congressional or presidential candidates or airing ads calling on the public to vote for or against a candidate.

The commission ruled that when such groups air ads, conduct get-out-the-vote drives or undertake other activities that promote, support, attack or oppose only federal candidates, they must use hard money. If a state or local candidate or the general party ticket also is mentioned, they can use a mix of hard and soft money.

Americans for a Better Country, a Republican group that asked the FEC to issue the opinion Wednesday, said that the ruling restricted much of what it planned to do but that it would look for ways it can use soft money to counter Democrat groups' spending in the fall election.

"We said from the beginning we are going to raise as much money as we possibly can based on what the commission says we can do," said Frank Donatelli, an attorney for the group.

Some lawyers who counsel tax-exempt political groups known as 527s believed the ruling set off cautionary notes for soft money 527s even if they aren't registered with the FEC.

"It would be irresponsible for an attorney to counsel a 527 group that it could spend soft money on messages the FEC has historically considered federal election activity, or that mentions the name of a federal candidate, without putting the group and their donors at considerable risk," said lawyer Ben Ginsberg, a Republican.

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