39–006 

109TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 109–146 

527 FAIRNESS ACT OF 2005 

JUNE 22, 2005.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. NEY, from the Committee on House Administration, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 1316] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on House Administration, to whom was referred 

the bill (H.R. 1316) to amend the Federal Election Campaign Act 

of 1971 to repeal the limit on the aggregate amount of campaign 

contributions that may be made by individuals during an election 

cycle, to repeal the limit on the amount of expenditures political 

parties may make on behalf of their candidates in general elections 

for Federal office, to allow State and local parties to make certain 

expenditures using nonfederal funds, to restore certain rights to exempt organizations under the Internal Revenue Code of 1986, and 

for other purposes, having considered the same, report favorably 

thereon with an amendment and recommend that the bill as 

amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘527 Fairness Act of 2005’’. 

SEC. 2. REPEAL OF AGGREGATE LIMIT ON CONTRIBUTIONS BY INDIVIDUALS. 

(a) REPEAL OF LIMIT.—Section 315(a) of the Federal Election Campaign Act of 

1971 (2 U.S.C. 441a(a)) is amended by striking paragraph (3). 

(b) CONFORMING AMENDMENTS.— 

(1) INDEXING.—Section 315(c) of such Act (2 U.S.C. 441a(c)) is amended by 

striking ‘‘(a)(3),’’ each place it appears in paragraphs (1)(B)(i), (1)(C), and 

(2)(B)(ii). 

2 

(2) INCREASE IN LIMITS FOR SENATE CANDIDATES FACING WEALTHY OPPO- NENTS.—Section 315(i)(1)(C) of such Act (2 U.S.C. 441a(i)(1)(C)) is amended— 

(A) by amending clause (i) to read as follows: 

‘‘(i) 2 times the threshold amount, but not over 4 times that amount, 

the increased limit shall be 3 times the applicable limit;’’; 

(B) by amending clause (ii) to read as follows: 

‘‘(ii) 4 times the threshold amount, but not over 10 times that 

amount, the increased limit shall be 6 times the applicable limit; and’’; 

and 

(C) in clause (iii)— 

(i) by adding ‘‘and’’ at the end of subclause (I), 

(ii) by striking subclause (II), and 

(iii) by redesignating subclause (III) as subclause (II). 

(3) INCREASE IN LIMITS FOR HOUSE CANDIDATES FACING WEALTHY OPPO- NENTS.—Section 315A(a)(1) of such Act (2 U.S.C. 441a—1(a)(1)) is amended— 

(A) by adding ‘‘and’’ at the end of subparagraph (A); 

(B) by striking subparagraph (B); and 

(C) by redesignating subparagraph (C) as subparagraph (B). 

SEC. 3. REPEAL OF LIMIT ON AMOUNT OF PARTY EXPENDITURES ON BEHALF OF CANDIDATES IN GENERAL ELECTIONS. 

(a) REPEAL OF LIMIT.—Section 315(d) of the Federal Election Campaign Act of 

1971 (2 U.S.C. 441a(d)) is amended— 

(1) in paragraph (1)— 

(A) by striking ‘‘(1) Notwithstanding’’ and inserting ‘‘Notwithstanding’’, 

(B) by striking ‘‘expenditures or limitations on’’ and inserting ‘‘amounts 

of expenditures or’’, and 

(C) by striking ‘‘Federal office, subject to the limitations contained in 

paragraphs (2), (3), and (4) of this subsection’’ and inserting ‘‘Federal office 

in any amount’’; and 

(2) by striking paragraphs (2), (3), and (4). 

(b) CONFORMING AMENDMENTS.— 

(1) INDEXING.—Section 315(c) of such Act (2 U.S.C. 441a(c)) is amended— 

(A) in paragraph (1)(B)(i), by striking ‘‘(d),’’; and 

(B) in paragraph (2)(B)(i), by striking ‘‘subsections (b) and (d)’’ and inserting ‘‘subsection (b)’’. 

(2) INCREASE IN LIMITS FOR SENATE CANDIDATES FACING WEALTHY OPPONENTS.—Section 315(i) of such Act (2 U.S.C. 441a(i)(1)) is amended— 

(A) in paragraph (1)(C), as amended by section 2(b)(2)(C), by amending 

clause (iii) to read as follows: 

‘‘(iii) 10 times the threshold amount, the increased limit shall be 6 

times the applicable limit.’’; 

(B) in paragraph (2)(A) in the matter preceding clause (i), by striking ‘‘, 

and a party committee shall not make any expenditure,’’; 

(C) in paragraph (2)(A)(ii), by striking ‘‘and party expenditures previously 

made’’; and 

(D) in paragraph (2)(B), by striking ‘‘and a party shall not make any expenditure’’. 

(3) INCREASE IN LIMITS FOR HOUSE CANDIDATES FACING WEALTHY OPPONENTS.—Section 315A(a) of such Act (2 U.S.C. 441a—1(a)) is amended— 

(A) in paragraph (1), as amended by section 2(b)(3), by striking ‘‘exceeds 

$350,000—’’ and all that follows and inserting the following: ‘‘exceeds 

$350,000, the limit under subsection (a)(1)(A) with respect to the candidate 

shall be tripled.’’; 

(B) in paragraph (3)(A) in the matter preceding clause (i), by striking ‘‘, 

and a party committee shall not make any expenditure,’’; 

(C) in paragraph (3)(A)(ii), by striking ‘‘and party expenditures previously 

made’’; and 

(D) in paragraph (3)(B), by striking ‘‘and a party shall not make any expenditure’’. 

SEC. 4. INCREASE IN CONTRIBUTION LIMITS FOR POLITICAL COMMITTEES. 

(a) CONTRIBUTIONS TO POLITICAL COMMITTEES.—Section 315(a)(1)(C) of the Federal Election Campaign Act of 1971 (2 U.S.C. 441a(a)(1)(C)) is amended by striking 

‘‘$5,000’’ and inserting ‘‘$7,500’’. 

(b) CONTRIBUTIONS MADE BY MULTICANDIDATE COMMITTEES.—Section 315(a)(2) of 

such Act (2 U.S.C. 441a(a)(2)) is amended— 

(1) in subparagraph (A), by striking ‘‘$5,000’’ and inserting ‘‘$7,500’’; 

(2) in subparagraph (B), by striking ‘‘$15,000’’ and inserting ‘‘$25,000’’; and 

(3) in subparagraph (C), by striking ‘‘$5,000’’ and inserting ‘‘$7,500’’. 

3 

SEC. 5. INDEXING OF ALL CONTRIBUTION LIMITS. 

(a) IN GENERAL.—Section 315(c)(1)(B) of the Federal Election Campaign Act of 

1971 (2 U.S.C. 441a(c)(1)(B)) is amended to read as follows: 

‘‘(B) Except as provided in subparagraph (C)— 

‘‘(i) in any calendar year after 2002— 

‘‘(I) a limitation established by subsection (a)(1)(A), (a)(1)(B), (b), or (h) 

shall be increased by the percent difference under subparagraph (A), 

‘‘(II) each amount so increased shall remain in effect for the calendar 

year, and 

‘‘(III) if any amount after the adjustment made under subclause (I) is not 

a multiple of $100, such amount shall be rounded to the nearest multiple 

of $100; and 

‘‘(ii) in any calendar year after 2006— 

‘‘(I) a limitation established by subsection (a)(1)(C), (a)(1)(D), or (a)(2) 

shall be increased by the percent difference under subparagraph (A), 

‘‘(II) each amount so increased shall remain in effect for the calendar 

year, and 

‘‘(III) if any amount after the adjustment made under subclause (I) is not 

a multiple of $100, such amount shall be rounded to the nearest multiple 

of $100.’’. 

(b) PERIOD OF INCREASE.—Section 315(c)(1)(C) of such Act (2 U.S.C. 441a(c)(1)(C)), 

as amended by section 2(b)(1), is amended by striking ‘‘subsections (a)(1)(A), 

(a)(1)(B), and (h)’’ and inserting ‘‘subsections (a) and (h)’’. 

(c) DETERMINATION OF BASE YEAR.—Section 315(c)(2)(B) of such Act (2 U.S.C. 

441a(c)(2)(B)) is amended— 

(1) by striking ‘‘and’’ at the end of clause (i); 

(2) by striking the period at the end of clause (ii) and inserting ‘‘; and’’; and 

(3) by adding at the end the following new clause: 

‘‘(iii) for purposes of subsections (a)(1)(C), (a)(1)(D), and (a)(2), calendar 

year 2005.’’. 

SEC. 6. PERMITTING TRANSFERS BETWEEN LEADERSHIP COMMITTEES AND NATIONAL 

PARTY COMMITTEES. 

Section 315(a)(4) of the Federal Election Campaign Act of 1971 (2 U.S.C. 

441a(a)(4)) is amended— 

(1) by striking ‘‘(4)’’ and inserting ‘‘(4)(A)’’; and 

(2) by adding at the end the following new subparagraph: 

‘‘(B) The limitations on contributions contained in paragraphs (1) and (2) do not 

apply to transfers between a leadership committee of an individual holding Federal 

office and political committees established and maintained by a national political 

party. For purposes of the previous sentence, the term ‘leadership committee’ 

means, with respect to an individual holding Federal office, an unauthorized political committee which is associated with such individual but which is not affiliated 

with any authorized committee of such individual.’’. 

SEC. 7. INCREASE IN THRESHOLD OF CONTRIBUTIONS AND EXPENDITURES REQUIRED FOR 

DETERMINING TREATMENT AS POLITICAL COMMITTEE. 

(a) IN GENERAL.—Section 301(4)(A) of the Federal Election Campaign Act of 1971 

(2 U.S.C. 431(4)(A)) is amended by striking ‘‘$1,000’’ each place it appears and inserting ‘‘$10,000’’. 

(b) LOCAL POLITICAL PARTY COMMITTEES.— 

(1) CONTRIBUTIONS RECEIVED.—Section 301(4)(C) of such Act (2 U.S.C. 

431(4)(C)) is amended by striking ‘‘$5,000’’ each place it appears and inserting 

‘‘$10,000’’. 

(2) CONTRIBUTIONS OR EXPENDITURES MADE.—Section 301(4)(C) of such Act (2 

U.S.C. 431(4)(C)) is amended by striking ‘‘$1,000’’ each place it appears and inserting ‘‘$10,000’’. 

SEC. 8. PROHIBITING CONTRIBUTIONS AND DONATIONS TO SECTION 527 ORGANIZATIONS BY 

FOREIGN NATIONALS. 

(a) IN GENERAL.—Section 319(a)(1) of the Federal Election Campaign Act of 1971 

(2 U.S.C. 441e(a)(1)) is amended— 

(1) by striking ‘‘or’’ at the end of subparagraph (B); 

(2) by redesignating subparagraph (C) as subparagraph (D); and 

(3) by inserting after subparagraph (B) the following new subparagraph: 

‘‘(C) a contribution or donation to an organization described in section 527 

of the Internal Revenue Code of 1986; or’’. 

(b) CONFORMING AMENDMENT REGARDING SOLICITATION OF FUNDS.—Section 

319(a)(2) of such Act (2 U.S.C. 441e(a)(2)) is amended by striking ‘‘(A) or (B)’’ and 

inserting ‘‘(A), (B), or (C)’’. 

4 

SEC. 9. REQUIRING SECTION 527 ORGANIZATIONS TO SUBMIT REPORTS UNDER FEDERAL 

ELECTION CAMPAIGN ACT OF 1971. 

Section 304(a) of the Federal Election Campaign Act of 1971 (2 U.S.C. 434(a)) is 

amended by adding at the end the following new paragraph: 

‘‘(13)(A) Except as provided in subparagraph (B), each organization described in 

section 527 of the Internal Revenue Code of 1986 shall submit a report under this 

section in the same manner, under the same terms and conditions, and at the same 

times applicable to a political committee which is not an authorized committee of 

a candidate or a national committee of a political party. 

‘‘(B) Subparagraph (A) does not apply to an organization described in section 

527(j)(5)(B) of the Internal Revenue Code of 1986 (relating to a State or local committee of a political party or political committee of a State or local candidate).’’. 

SEC. 10. PERMITTING EXPENDITURES FOR ELECTIONEERING COMMUNICATIONS BY CERTAIN 

ORGANIZATIONS. 

(a) PERMITTING ORGANIZATIONS TO MAKE EXPENDITURES FOR CERTAIN TARGETED

ELECTIONEERING COMMUNICATIONS.—Section 316(c) of the Federal Election Campaign Act of 1971 (2 U.S.C. 441b(c)) is amended by striking paragraph (6). 

(b) EXPANDING TYPES OF ORGANIZATIONS ELIGIBLE TO MAKE EXPENDITURES.— 

(1) IN GENERAL.—Section 316(c) of such Act (2 U.S.C. 441b(c)) is amended by 

striking ‘‘section 501(c)(4) organization’’ each place it appears in paragraphs (2), 

(3)(B), and (4)(A) (in the matter preceding clause (i)) and inserting ‘‘section 

501(c)(4), (5), or (6) organization’’. 

(2) DEFINITION.—Section 316(c)(4)(A)(i) of such Act (2 U.S.C. 441b(c)(4)(A)(i)) 

is amended by striking ‘‘section 501(c)(4) of the Internal Revenue Code of 1986’’ 

and inserting ‘‘paragraph (4), (5), or (6) of section 501(c) of the Internal Revenue 

Code of 1986’’. 

(c) CLARIFICATION OF EFFECT ON TAX TREATMENT OF EXPENDITURES.—Section 

316(c)(5) of such Act (2 U.S.C. 441b(c)(5)) is amended by striking the period at the 

end and inserting the following: ‘‘, or to affect the treatment under such Code of 

any expenditures described in section 527(e) of such Code which are made by a section 501(c)(4), (5), or (6) organization.’’. 

SEC. 11. EXPANDING ABILITY OF CORPORATIONS AND LABOR ORGANIZATIONS TO COMMUNICATE WITH MEMBERS. 

(a) TYPES OF COMMUNICATIONS PERMITTED.—Section 316(b)(4)(B) of the Federal 

Election Campaign Act of 1971 (2 U.S.C. 441b(b)(4)(B)) is amended by striking ‘‘only 

by mail addressed’’ and inserting ‘‘only by communications addressed or otherwise 

delivered’’. 

(b) SOLICITATIONS BY TRADE ASSOCIATIONS.—Section 316(b)(4)(D) of such Act (2 

U.S.C. 441b(b)(4)(D)) is amended by striking ‘‘to the extent that’’ and all that follows 

and inserting a period. 

SEC. 12. PERMITTING STATE AND LOCAL POLITICAL PARTIES TO USE NONFEDERAL FUNDS 

FOR VOTER REGISTRATION AND SAMPLE BALLOTS. 

(a) IN GENERAL.—Section 301(20) of the Federal Election Campaign Act of 1971 

(2 U.S.C. 431(20)) is amended— 

(1) in subparagraph (A), by striking clause (i) and redesignating clauses (ii) 

through (iv) as clauses (i) through (iii); and 

(2) in subparagraph (B)— 

(A) in clause (i), by striking ‘‘subparagraph (A)(i) or (ii)’’ and inserting 

‘‘subparagraph (A)(i)’’; 

(B) by striking ‘‘and’’ at the end of clause (iii); 

(C) by striking the period at the end of clause (iv) and inserting a semicolon; and 

(D) by adding at the end the following new clauses: 

‘‘(v) voter registration activities; and 

‘‘(vi) the costs incurred with the preparation of a sample ballot for an 

election in which a candidate for Federal office and a candidate for 

State or local office appears on the ballot.’’. 

(b) CONFORMING AMENDMENTS.—(1) Section 304(f)(3)(B)(iv) of such Act (2 U.S.C. 

434(f)(3)(B)(iv)) is amended by striking ‘‘section 301(20)(A)(iii)’’ and inserting ‘‘section 301(20)(A)(ii)’’. 

(2) Section 323 of such Act (2 U.S.C. 441i) is amended— 

(A) in subsection (b)(2)(A), by striking ‘‘clause (i) or (ii)’’ and inserting ‘‘clause 

(i)’’; 

(B) in subsection (e)(4), by striking ‘‘clauses (i) and (ii)’’ each place it appears 

in subparagraphs (A) and (B) and inserting ‘‘clause (i)’’; and 

(C) in subsection (f)(1), by striking ‘‘section 301(20)(A)(iii)’’ and inserting ‘‘section 301(20)(A)(ii)’’. 

5 

SEC. 13. CLARIFICATION OF AUTHORIZATION OF FEDERAL CANDIDATES AND OFFICEHOLDERS TO ATTEND FUNDRAISING EVENTS FOR STATE OR LOCAL POLITICAL 

PARTIES. 

Section 323(e)(3) of the Federal Election Campaign Act of 1971 (2 U.S.C. 

441i(e)(3)) is amended by striking ‘‘speak,’’ and inserting ‘‘speak without restriction 

or regulation,’’. 

SEC. 14. MODIFICATION OF DEFINITION OF PUBLIC COMMUNICATION. 

(a) IN GENERAL.—Section 301(22) of the Federal Election Campaign Act of 1971 

(2 U.S.C. 431(22)) is amended by adding at the end the following new sentence: 

‘‘Such term shall not include communications over the Internet.’’. 

(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect on 

the date of the enactment of this Act. 

SEC. 15. TREATMENT OF CANDIDATE COMMUNICATIONS CONTAINING ENDORSEMENT BY 

FEDERAL CANDIDATE OR OFFICEHOLDER. 

(a) IN GENERAL.—Section 315(a) of the Federal Election Campaign Act of 1971 (2 

U.S.C. 441a(a)) is amended by adding at the end the following new paragraph: 

‘‘(9)(A) For purposes of paragraph (7)(C), a disbursement for an electioneering 

communication which refers to a candidate for Federal office shall not be treated 

as a disbursement which is coordinated with such candidate solely on the ground 

that the communication contains a State or local endorsement or (in the case of a 

communication containing a State or local endorsement) that the candidate reviewed, approved, or otherwise participated in the preparation and dissemination of 

the communication. 

‘‘(B) In subparagraph (A), the term ‘State or local endorsement’ means, with respect to a candidate for Federal office— 

‘‘(i) an endorsement by such candidate of a candidate for State or local office 

or of another candidate for Federal office; or 

‘‘(ii) a statement of the position of such candidate on a State or local ballot 

initiative or referendum.’’. 

(b) CONFORMING AMENDMENT.—Section 315(a)(7)(C)(ii) of such Act (2 U.S.C. 

441a(a)(7)(C)(ii)) is amended by striking ‘‘such disbursement’’ and inserting ‘‘subject 

to paragraph (9), such disbursement’’. 

(c) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to elections occurring on or after the date of the enactment of this Act. 

SEC. 16. SEVERABILITY. 

If any provision of this Act or any amendment made by this Act, or the application of a provision or amendment to any person or circumstance, is held to be unconstitutional, the remainder of this Act and the amendments made by this Act, and 

the application of the provisions and amendments to any person or circumstance, 

shall not be affected by the holding. 

SEC. 17. EFFECTIVE DATE. 

Except as otherwise provided, the amendments made by this Act shall take effect 

January 1, 2006. 

PURPOSE OF THE LEGISLATION

The Bipartisan Campaign Reform Act of 2002 (‘‘BCRA’’) threw 

our federal campaign finance system out of balance when it passed 

three years ago. The law’s proponents claimed that BCRA would 

ban soft money, but it didn’t. Rather, it merely diverted the flow 

of soft money. In the process, power and influence were shifted 

away from our political parties and towards less accountable, ideologically driven Section 527 organizations and other outside groups. 

Furthermore, BCRA’s tangled web of onerous restrictions and 

harsh criminal penalties significantly impeded the ability of citizens and associations to exercise their First Amendment rights. 

Rather than add to the labyrinthine set of rules and regulations already on the books, the Committee opts to take a different, more 

productive approach. 

The purpose of H.R. 1316, the 527 Fairness Act of 2005, as 

amended, is to restore some of the balance that was lost when 

BCRA was enacted. H.R. 1316, co-authored by Representatives 

Mike Pence (R–IN) and Albert Wynn (D–MD), accomplishes this 

6 

1 Alexander Bolton, ACT to Spend $30 Million, The Hill, Jun. 14, 2005, at 1. 

2 540 U.S. 93, 95 (2003). 

3 148 Cong. Rec. H339 (daily ed. Feb. 13, 2002). 

4 147 Cong. Rec. S3105 (daily ed. Mar. 29, 2001). 

5To be sure, there were 527 groups in the 2004 election cycle that were Republican-leaning. 

However, the overwhelming majority of soft money raised and spent during the most recent election was by anti-Bush 527s. Studies indicate that Democrat-leaning 527s outraised and outspent 

Republican-leaning 527s by about a margin of four-to-one. See Steve Weissman & Ruth Hassan, 

objective not by tearing down 527 organizations but by lifting up 

party committees, political action committees (‘‘PACs’’), and individuals so that they can compete on a more level playing field with 

527 organizations. Currently, 527 organizations are able to fund 

their political activities with unlimited ‘‘soft money’’ contributions 

from labor unions, corporations, and wealthy individuals. And 

there are already reports that 527 organizations may ‘‘have a bigger impact on the [2006] midterm elections than they had on last 

year’s presidential race because . . . their spending would make up 

a greater percentage of total political spending.’’ 1 Thus, it is essential that the other entities involved in our campaign system— 

namely, parties, candidates, committees, and citizens—be able to 

raise the hard money resources they need to stay afloat in a political environment flooded by 527 soft money. And it is equally important that the American public receive full and timely disclosure 

regarding the individuals and groups that are financing the 527 organizations. 

When the Supreme Court upheld the constitutionality of most of 

BCRA’s provisions in McConnell v. FEC, it found that Congress 

‘‘enjoys particular expertise’’ with respect to campaign finance regulation that warrants ‘‘proper deference.’’ 2 So, although the constitutional questions regarding BCRA have been largely resolved, 

at least for the moment, Congress has an ongoing responsibility to 

use its expertise to evaluate the efficacy of the nation’s election 

laws and to make modifications as necessary to improve the functioning of our campaign finance system. In the Committee’s estimation, H.R. 1316 is necessary to correct the deficiencies in BCRA 

and to ameliorate the negative consequences that arose in the wake 

of its passage. 

Even before BCRA was passed, several Members predicted that, 

contrary to the assertions of its supporters, BCRA would do nothing to stem the tide of soft money. For instance, Chairman Ney 

flatly stated on the House Floor that BCRA ‘‘does not ban soft 

money under any definition or under any stretch of the imagination.’’ 3 Similarly, Senator Mitch McConnell said at the time that 

‘‘under this bill, I promise you, if [BCRA] becomes law, there won’t 

be one penny less spent on politics—not a penny less. In fact, a 

good deal more will be spent on politics.’’ 4 So, an explosion of soft 

money spending by 527 organizations during the 2004 election was 

by no means unanticipated. 

True to the predictions of these Members, as soon as BCRA went 

into effect, plans were being hatched to steer soft money—which 

party committees had previously been able to accept but could no 

longer—towards 527 groups. Though 527s are legally prohibited 

from expressly advocating the election or defeat of a federal candidate, several sprung up that were unabashed in stating that 

their mission was to defeat President George W. Bush in the 2004 

presidential election.5 The most generous contributor to anti-Bush 

7 

BCRA and the 527 Groups, Campaign Fin. Inst. Report, Table A–2, available at http:// 

www.cfinst.org/studies/ElectionAfterReform/pdf/EARl527Chapter.pdf. 6See Large 527 Donors for Election Cycle 2004, Political Money Line, available at http:// 

www.fecinfo.com/cgi-win/irslefltop.exe?DoFn=DONOR&sYR=2004. 7Laura Blumenfeld, Soros’s Deep Pockets vs. Bush; Financier Contributes $5 Million More in 

Effort to Oust President, Wash. Post, Nov. 11, 2003, at A03. 8 Id. The entire article will be included in the appendix to this report. 

9http://www.fecinfo.com/cgi-win/irslefl527.exe?DoFn=&sYR=2004. 10 ACT President Ellen Malcolm stated: ‘‘We have to find ways to come together to do lots 

of the pieces of the presidential campaign, because the party will not have the soft money to 

use. We on the Democratic side are looking for effective ways to do the work of delivering the 

message and getting out the vote that used to be done by the party.’’ Julie Kosterlitz, On the 

Ropes? 35 Nat’l J., Sept. 6, 2003, at 36. 

527s was billionaire George Soros, who donated over $27 million to 

these groups.6 In the year leading up to the 2004 presidential race, 

Mr. Soros stated that ‘‘defeating President Bush’’ was ‘‘the central 

focus of my life’’ and ‘‘a matter of life and death,’’ and that he was 

‘‘willing to put my money where my mouth is.’’ 7 As documented by 

the Washington Post, 

[Mr. Soros’s] campaign began last summer with the help 

of Morton H. Halperin, a liberal think tank veteran. Soros 

invited Democratic strategists to his house in Southampton, Long Island, including Clinton chief of staff John 

D. Podesta, Jeremy Rosner, Robert Boorstin and Carl 

Pope. 

They discussed the coming election. Standing on the 

back deck, the evening sun angling into their eyes, Soros 

took aside Steve Rosenthal, CEO of the liberal activist 

group America Coming Together (ACT), and Ellen Malcolm, its president. They were proposing to mobilize voters 

in 17 battleground states. Soros told them he would give 

ACT $10 million . . . 

Before coffee the next morning, his friend Peter Lewis, 

chairman of the Progressive Corp., had pledged $10 million to ACT. Rob Glaser, founder and CEO of 

RealNetworks, promised $2 million. Rob McKay, president 

of the McKay Family Foundation, gave $1 million and benefactors Lewis and Dorothy Cullman committed $500,000.8

According to the Political Money Line, 527 groups expended 

nearly $600 million during the 2004 election cycle.9 A number of 

these organizations functioned as ‘‘shadow’’ political party committees that, with the apparent stamp of approval of the relevant federal officeholders and party officials, solicited and spent soft money 

in support of the party’s candidates and agenda and took over, to 

a large extent, traditional party functions, such as voter registration and get-out-the-vote activities.10

Proponents of BCRA now argue that the new law’s effectiveness 

should be judged not by whether soft money still thrives but by 

whether it has succeeded in severing the link between federal elected officials and soft money. And on this ground, BCRA’s supporters 

declare that the new law is a rousing success. While it may be true 

that federal officeholders and candidates are no longer directly soliciting soft money, it would be inaccurate to state that the link between soft money organizations and federal officeholders, candidates, and top party officials has been completely severed. 

During the 2004 election cycle, there were numerous connections 

between top party officials and major 527 groups, and there was 

8 

11 Jim Drinkard, ‘‘Outside’’ Political Groups Full of Party Insiders, USA TODAY, Jun. 28, 

2004, at 7A. 12 Jim Rutenberg & Glen Justice, A Delegate, a Fund-Raiser, and a Very Fine Line, N.Y. 

Times, Jul. 29, 2004, at A1. 

also steady movement between political campaigns and 527s. For 

instance, Harold Ickes, former top advisor to President Bill Clinton, 

functioned as both a member of the Executive Committee of the 

Democratic National Committee (DNC) while also serving as President of the Media Fund—a 527 dedicated to running anti-Bush and 

pro-Democrat ads—and Chief of Staff to ACT, which focused on 

getting out the Democratic vote.11 The dual and often interrelated 

roles played by Mr. Ickes were on full display during the 2004 

Democratic National Convention in Boston. According to an article 

by the New York Times, Mr. Ickes ‘‘court[ed] some the Democrats’ 

wealthiest donors here at the Four Seasons’’ during the day, soliciting them for contributions to the Media Fund, and ‘‘[t]hen, in the 

evenings, this onetime White House deputy chief of staff throws on 

his credentials as a Democratic Party superdelegate and joins party 

functionaries gathered for the Democratic convention at the 

FleetCenter as one of their own.’’ 12 The article continued: 

The scene at the Four Seasons this week has shown just 

how close to the line of independence groups like The 

Media Fund—which has been running advertisements 

against President Bush since March—can come. 

Just down the hallway from Mr. Ickes’s second-floor 

suite in the Wendell Phillips Room is the registration office in the Winthrop Room, where fund-raisers pick up 

their special-access passes. As Mr. Ickes mingled with 

passers-by outside of his suite Wednesday afternoon, a parade of campaign and party officials walked by, including 

Bob Shrum, Mr. Kerry’s chief strategist. Mr. Shrum and 

Mr. Ickes have worked on campaigns together like the 

David N. Dinkins New York mayoral campaigns of 1989 

and 1993. 

Mr. [Erik] Smith [Executive Director of the Media Fund] 

was also right near longtime comrades-in-arms. While Mr. 

Smith sat at a table in the Four Seasons lounge speaking 

with a reporter on Tuesday, Steve Elmendorf, Mr. Kerry’s 

deputy campaign manager, who is staying at a nearby 

hotel, passed by the window. Mr. Elmendorf was a senior 

adviser for the presidential campaign of Representative 

Richard A. Gephardt of Missouri last fall when Mr. Smith 

was its press secretary. 

The proximity is hardly by chance. The hotel is not just 

the base of operation for Mr. Smith, Mr. Ickes and yet another group for which Mr. Ickes is raising money, America 

Coming Together, but has also become a salon for top 

fund-raisers in the Kerry campaign and the Democratic 

Party. . . . 

But the intermingling of the avowed independent groups 

and Democratic officials is not restricted to the Four Seasons here. Environment 2004, an organization that runs a 

527 committee held a reception to thank donors on Monday at the Beacon Hill home of Cathy Douglas Stone, a 

Boston environmental activist. Among those who spoke 

9 

13 Id. The entire article will be included in the appendix to this report. 14 Chris Cillizza, MoveOn Goes Mainstream, Roll Call, Apr. 13, 2005. 15See Political Money Line, 527 Donor: George Soros, available at http://www.fecinfo.com/ 

cgi-win/irsleflinter.exe?DoFn=&sText=44919&sYR=2004. 16 Cillizza, supra note 11. 17 Id. 

were the columnist Arianna Huffington, the singer Carole 

King and Senator Maria Cantwell of Washington. 

On Monday Ms. Malcolm was on hand at an event honoring Representative Nancy Pelosi of California, the House 

minority leader, that drew dozens of lawmakers and major 

donors together to drink lemonade and iced tea in a garden atrium of the Isabella Stewart Gardner museum. 

Later that night, Ms. Malcolm, like Mr. Ickes, was on the 

convention floor. 

And Mr. Ickes is not the only official of a 527 group with 

delegate status. Simon Rosenberg, head of the New Democrat Network, a group running Spanish-language advertisements against Mr. Bush since March, said he sits on 

the convention’s platform committee.13

Other examples of top party officials who also played formal roles 

in the operation of 527 groups included New Mexico Governor Bill 

Richardson, who simultaneously served as Convention Chair of the 

DNC Convention and as the Vice Chair of Voice for Working Families, a Democrat-leaning 527 group that spent over $7 million in 

2004. And Jim Jordan went from being John Kerry’s campaign 

manager to serving as spokesperson for the Media Fund and representing that group as well as ACT and America Votes. 

As for the flow of personnel from 527 groups to political campaigns, Zach Exley transitioned from Director of Special Projects 

for MoveOn.org to become the Director of Online Communications 

and Organization for John Kerry’s presidential campaign. Similarly, Bill Knapp first served as an ad consultant to the Media 

Fund before being hired by the Kerry campaign. Whether any of 

the arrangements listed above constituted illegal coordination in 

violation of federal campaign finance law, the Committee offers no 

opinion. However, these interactions do demonstrate that BCRA’s 

wall separating federal officeholders, candidates, and party officials 

from the influence of soft money is unquestionably porous. 

In the aftermath of the 2004 election, the interrelations between 

the 527s and Democrat lawmakers and party officials has only 

grown. House Democratic Leader Nancy Pelosi acknowledges that 

she ‘‘or her staff have calls and meetings ‘on a weekly basis’ with 

representatives of MoveOn’’ 14—one of the most active Democratleaning 527s during the most recent election cycle, and a group to 

which George Soros gave $2.5 million.15 The DNC has praised 

MoveOn for its efforts, stating that ‘‘[o]bviously they are relaying 

the Democratic Party message.’’ 16 And in an e-mail sent out earlier 

this year to MoveOn supporters, Eli Pariser, the executive director 

of the organization, brazenly announced that the Democratic Party 

is now ‘‘our party: We bought it, we own it and we’re going to take 

it back.’’ 17 Thus, the prediction by BCRA’s supporters that soft 

money would be purged from the federal electoral process and that 

the overall impact of money on politics would be lessened has been 

proven false. 

10 

18 147 Cong. Rec. S2812–13 (Mar. 23, 2001). 19 Id. at S3012 (Mar. 28, 2001). 20 Agustin Armendariz & Aron Pilhofer, McCain-Feingold Changes State Party Spending, 

May, 26, 2005, available at http://www.publicintegrity.com / partylines/report.aspx?aid=690&sid=300. 

Those who allege that the continuing presence of soft money in 

the federal electoral process is the fault of the FEC are being disingenuous. For it was not only the opponents of BCRA who pointed 

out that the law would not eliminate soft money but merely redirect it to less accountable channels; the reformers themselves acknowledged that soft money would still play a role through its use 

by independent groups. For instance, Senator Jim Jeffords, the author of a prominent section of BCRA, stated flatly during the Senate debate that BCRA ‘‘will not prohibit groups like the National 

Right to Life Committee or the Sierra Club from disseminating 

electioneering communications; It will not prohibit such groups 

from accepting corporate or labor funds; It will not require such 

groups to create a PAC or another separate entity.’’ 18 Likewise, 

Senator Olympia Snowe averred that ‘‘[w]e are not saying they 

can’t run ads. They can run ads all year long. They can do whatever they want in that sense. But what we are saying is, when they 

come into that narrow window, we have the right to know who are 

their major contributors who are financing those ads close to an 

election.’’ 19

BCRA has also had a harmful effect on the political parties in 

this country. The reformers respond to this charge by claiming that 

the fundraising for the national parties during the 2004 election 

cycle is going better than ever. However, this provides a very incomplete picture of the overall health of the nation’s party structure. As is typical of the reform crowd, they focus exclusively on 

what is happening at the federal level and basically view state and 

local parties as nothing more than vehicles used by the national 

parties to circumvent the federal campaign finance laws. A closer 

look at the operations of state and local parties, though, reveals a 

troubling situation. 

A recent report by the Center for Public Integrity shows that 

‘‘[c]ampaign finance reform took a bite out of the bottom line for 

state parties in 2004.’’ The report concludes that ‘‘[t]he downturn 

is largely attributable to the Bipartisan Campaign Reform Act.’’ 

The report notes that ‘‘state parties drastically reduced their investment in political advertising after the McCain-Feingold legislation eliminated transfers of soft money from the national committees to their state affiliates.’’ The result was a drop of 74 percent 

in advertising. However, the report found that despite the drastic 

decline in state party advertising, BCRA did not result in less 

money being spent on political ads, primarily because ‘‘media buys 

of 527 and 501(c)(4) non-profit organizations ...made up the difference.’’ 20 So again, it is clearly demonstrated that BCRA did not 

reduce the amount of soft money in politics; it just steered soft 

money to entities that are unaccountable to the electorate. 

Comments recently submitted to the Federal Election Commission by Mark Brewer, the President of the Association of State 

Democratic Chairs, clearly and alarmingly demonstrate the difficulties that state and local parties face in a post-BCRA world. Mr. 

Brewer notes: ‘‘State and local party committees operate in a very 

11 

21 Comments of Mark Brewer on Proposed Regulations Defining Federal Election Activity and 

on the Proposed Regulation Governing Allocation of Salaries by State and Local Party Committees, submitted to the Federal Election Commission, available at http://www.fec.gov/pdf/ 

nprm/fealdefinition/comml03.pdf. The entire comments will be included in the appendix to 

this report. 22 ‘‘Q. [Business Week]: Will elections be cleaner this year because of McCain-Feingold reforms? 

‘‘A. [Senator McCain]: They’re cleaner, and here’s why: Sixty days prior to the election, you 

will not see the flood of [negative] advertising you saw before. And I approve of the ’stand by 

your ad’ clause. It has dramatically reduced the number of attack ads.’’ McCain: The FEC is 

a ‘‘Total Disgrace,’’ Bus. Wk. Online, Jun. 14, 2004, available at http://www.businessweek.com/ 

magazine/content/04l24/b3887079.htm. 

See also, 148 Cong. Rec. 2117 (daily ed. Mar. 20, 2002)(statement of Sen. Cantwell)(asserting 

that BCRA ‘‘is about slowing political advertising and making sure the flow of negative ads by 

outside interest groups does not continue to permeate the airwaves); 147 Cong. Rec. 2692 (daily 

ed. Mar. 22, 2001) (statement of Sen. Wyden)(claiming that BCRA’s ‘‘stand-by-your-ad’’ provisions ‘‘will help slow the explosive growth of negative political commercials that are corroding 

the faith of individuals in the political process). 

complex regulatory environment. No other political committees are 

asked to manage such Byzantine rules.’’ He goes on to say: ‘‘An unfortunate consequence of BCRA is that many state and local party 

committees are avoiding participating in grassroots political activity because federal law poses compliance challenges that are beyond their ability to meet.’’ He further states that BCRA’s restrictions have left many party committees, ‘‘particularly [those] at the 

local level and in states that [are] not Presidential targets,’’ unable 

to raise ‘‘sufficient federal funds to pay for voter registration, voter 

identification and get-out-the-vote programs . . . Instead of running the risk of violating federal law, many committees simply [do] 

not engage in federal election activity.’’ Mr. Brewer rues the fact 

that burdensome regulations are ‘‘accelerat[ing] the flow of [GOTV] 

activities out of the party into less accountable political organizations.’’ Mr. Brewer pungently concludes his comments with the following remarks: 

The Commission’s regulations should reflect what state 

and local committees actually do, rather than unfounded 

fears of wholesale circumvention of the law. Facts rather 

than wildly imagined corruptive schemes should guide the 

Commission. Visit a few local party committees and any 

fears will be allayed. Add to the complexity of the regulation and there will be fewer to visit.21

As the above clearly demonstrates, state and local parties are 

starved of resources and being suffocated by excessive regulation, 

largely due to BCRA. This is not good for our democracy. The political parties play a crucial role as mediating institutions within our 

political system. The health of our democracy is inseparably linked 

to the health of our political parties. Consequently, changes need 

to be made to ensure the continuing viability of our party structure 

at all levels: federal, state, and local. 

It is useful to examine what other promises were made by 

BCRA’s supporters and compare them against the actual results. 

BCRA’s supporters asserted that the new law would result in fewer 

negative advertisements being broadcast during the course of campaigns and, thus, usher in a new era of more honest, less negative 

politics.22 But if anything, BCRA’s passage has actually led to an 

12 

23 ‘‘[T]he 2004 election cycle . . . has evolved into one of the most relentlessly negative political campaigns in memory, as attacks on a candidate’s character, patriotism and fitness for office, which once seemed out of bounds, have become routine. More ads than ever focused on discrediting an opponent rather than promoting a candidate, independent analysts said. . . . 

‘‘Part of the negative tenor of the 2004 campaign can be traced to the proliferation of independent political groups known as 527s, named for the tax-code section that governs them.’’ 

Janet Hook, Campaigns Accentuate the Negative, L.A. Times, Oct. 17, 2004, at A1. 24 ‘‘[I]t doesn’t take a genius to realize that campaign finance reform makes it easier and more 

convenient for both sides to run nasty advertising while avoiding any accountability for toxic 

messages. . . . Far from banishing money from politics, McCain-Feingold has merely moved it 

out of the major parties and into the political shadows, where it is less accountable. John Fund, 

Why We’re Refighting Vietnam: Blame McCain-Feingold, Wall St. J. 25See, e.g., 148 Cong. Rec. 1996 (daily ed. Mar. 18, 2002)(statement of Sen. Dodd)(‘‘[A]dopting 

this moderate legislation [ ] restores the proper balance of money to politics and restores the 

American people’s confidence in our current financing system.’’). 26See Political Money Line, Campaign Finance Reform Lobby: 1994–2004, available at http:// 

www.fecinfo.com/cgi-win/cfglsummary.exe?DoFn=; see also Ryan Sager, Buying ‘‘Reform, N.Y. 

Post, Mar. 17, 2005, at 33 (‘‘Campaign-Finance reform has been an immense scam perpetrated 

on the American people by a cadre of left-wing foundations and disguised as a ‘mass movement.’ ’’). 

increase in negative, scorched-earth politicking.23 The reason for 

this is two-fold: 

1. Money is being diverted away from the political parties— 

which, as broad-based organizations, must moderate their messages to appeal to the largest audience possible—and is instead 

being given to single-issue ideological groups whose stances are 

often dogmatic, whose communication strategies are often 

hard-edged, and who aren’t accountable to the voters; and 

2. It is now an almost universal political tactic for candidates 

and groups to file complaints against their opponents alleging 

violations of a vague, complex, and difficult-to-understand campaign finance law. Thus, these laws encourage political actors 

to not only attack the policy positions of their opponents but 

to tar them as lawbreakers as well. 

In this way, BCRA has contributed to a more negative, and often 

poisonous, political environment.24

The reformers also argued that, upon BCRA’s passage, public 

cynicism about the political process would abate because elections 

would now be free from the taint of soft money and the appearance 

of improper influence.25 Actually, it is more likely that the American people become more cynical when they are told that a law will 

rid the political system of soft money, see that it does not, and then 

have to listen to the advocates of the law crow about what a success it is. And one becomes even more incredulous upon learning 

that the same groups that continually rail against the supposedly 

corrupting effects of soft money themselves have no compunctions 

about taking approximately $140 million in soft money as part of 

a manufactured effort by a handful of liberal foundations to create 

the false impression that a mass grassroots movement was demanding campaign finance reform.26

Finally, we were told that BCRA would enable the average person to have a greater influence on the political process. However, 

that’s not how things have turned out. BCRA’s complexities and 

ambiguities, combined with its harsh penalties, have increasingly 

made the federal political process the exclusive province of the rich, 

the sophisticated, and the well-connected. And it is now becoming 

unclear whether the Internet, which has been a revolutionary tool 

for engaging the American citizenry in the democratic process, will 

remain a dynamic, unfettered, and accessible medium for exchanging political ideas if we do not act to prevent the heavy hand of 

13 

27McConnell, 540 U.S. at 268–69. 

government from imposing burdensome regulations governing online political speech. Thus, BCRA was supposed to enhance the 

voice of the average citizen, but instead, it has increasingly frozen 

out the average citizen from the political process. 

In his dissent in the McConnell case, Justice Clarence Thomas 

remarked about the self-perpetuating nature of campaign finance 

regulation: ‘‘Every law has limits, and there will always be behavior not covered by the law but at its edges; behavior easily characterized as ‘circumventing’ the law’s prohibition. Hence, speech regulation will again expand to cover new forms of ‘circumvention,’ 

only to spur supposed circumvention of the new regulations, and so 

forth. [This then turns into a] never-ending and self-justifying process.’’ 27 The clamor of the reformers for additional legislation to 

plug existing ‘‘loopholes’’ in BCRA provides further evidence of Justice Thomas’s main point: regulation begets further regulation. Instead of blindly going down the path of more and more regulation, 

much of which is counterproductive, H.R. 1316 seeks to—in the 

words of its co-author, Congressman Pence—‘‘inject[ ] more freedom 

into the campaign system.’’ 

H.R. 1316 strengthens our political parties by removing unnecessary regulatory obstacles that hinder the parties’ ability to raise 

money and communicate with their candidates and also buttresses 

the ability of state and local parties to engage in traditional party 

functions, like voter registration and distributing sample ballots. It 

updates and indexes outdated limits. It sheds more sunlight on the 

activities of 527 groups, ensures that foreign nationals cannot influence American elections through contributions to such groups, 

and enables non-profit organizations to broadcast electioneering 

communications on equal terms with 527s. It protects the ability of 

our citizens to participate in the national political dialogue using 

Internet web sites and blogs without fear of being subject to complex regulation. And it bolsters the First Amendment rights of federal officeholders and candidates to fully participate in elections in 

their home states and in the communities they represent. 

It is also important to note what H.R. 1316 does not do. It does 

not repeal the soft money ban in BCRA. It does not lift the prohibition on federal officeholders and candidates soliciting soft money. 

And it does not repeal the individual limits on contributions to candidates, parties, and PACs. Thus, H.R. 1316 is a narrowly tailored 

bill designed to correct current deficiencies and distortions in our 

nation’s campaign finance system and to make it fairer and more 

balanced for everyone. 

SUMMARY OF THE LEGISLATION

Section 1.—Short Title: The ‘‘527 Fairness Act of 2005.’’ 

Section 2.—Repeal of Aggregate Limit on Contributions by Individuals. • Repeals the limit on the total amount of contributions that 

an individual may give to candidates and committees during 

an election cycle. 

Under current law, an individual is subject to a $101,400 aggregate contribution limit during a two-year election cycle. This aggregate limit forces national, state, and local party committees and 

14 

28Michael E. Toner, Pass Pence-Wynn So We Can Fix Coordinated Expenditures, Roll Call, 

Jun. 15, 2005, at 4. 29This figure was reached using the inflation calendar available on web site for the Department of Labor’s Bureau of Labor Statistics < http://www.bls.gov/cpi/home.htm> (accessed Jun. 

15, 2005). 

PACs to compete against each one another for a donor’s dollars, 

since an individual is prohibited from giving a maximum contribution to each group. This competition has been especially harmful to 

state and local parties. 

The removal of the ceiling on total contributions will encourage 

more giving to party committees, candidates, and other groups subject to disclosure and contribution limits and less to unaccountable 

outside groups. In addition, the unproductive competition among 

party committees and PACs will cease. 

Note: this provision affects only the aggregate contribution limit 

and does not repeal the limits on what a person may give to any 

one candidate or committee. 

Section 3.—Repeal of Limit on Amount of Party Expenditures on 

Behalf of Candidates in General Elections. 

• Repeals the limit on expenditures coordinated between 

party committees and their candidates. 

Political parties are currently able to make unlimited independent expenditures on behalf of their Senate and House candidate but are limited in the amount of coordinated expenditures 

they may make. This disparity is premised on the untenable notion 

that candidates are potentially in danger of being corrupted by 

their own parties. As FEC Commissioner Michael Toner has pointed out, ‘‘These Draconian party spending limits are an anachronism and serve no legislative purpose. . . . Given that every single 

dollar that a political party wishes to spend on coordinated expenditures must be made out of hard money, there is no anti-corruption 

rationale for continuing to limit these party expenditures.’’ 28

Therefore, this provision removes the wedge that’s been driven between parties and their own candidates. 

Section 4.—Increase in Contribution Limits for Political Committees. 

• Increases the limit on contributions made to or by PACs 

from $5,000 to $7,500. 

• Increases the limit on PAC contributions to national party 

committees from $15,000 to $25,000, thus putting PACs on 

equal footing with individuals. 

The PAC contribution limits have not been raised since 1974; 

consequently, their value has been eroded by inflation. In fact, had 

the PAC limit set in 1974 been indexed for inflation, the current 

limit would be $19,716.29 Therefore, the PAC contribution limits 

are long overdue for this very modest increase. 

Section 5.—Indexing of All Contribution Limits. • Indexes the contribution limits for PACs. • Indexes the contribution limits for state party committees. 

BCRA permits the indexing of some contribution limits for inflation but inexplicably leaves other limits unindexed. This provision 

will ensure that all contribution limits are periodically adjusted to 

account for inflation. 

Section 6.—Permitting Transfers between Leadership Committees and National Party Committees. 

15 

• Permits unlimited transfers between leadership PACs and 

national party committees. 

Under current law, a candidate’s authorized campaign committee 

may make unlimited transfers to a national party committee, but 

a candidate’s leadership PAC may not. There is no reason for this 

disparate treatment. Thus, this provision puts leadership PACs at 

parity with authorized campaign committees. 

Section 7.—Increase in Threshold of Contributions and Expenditures Required for Determining Treatment as Political Committee. 

• Raises the political committee registration threshold to 

$10,000. 

This provision protects small political organizations from the requirement of registering and reporting with the FEC. Under current law, if a group raises or spends a mere $1,000 in connection 

with a federal election, it has to register with the FEC as a political committee. This $1,000 threshold has been in place since 1974 

and, thus, needs to be updated to account for inflation. 

Section 8.—Prohibiting Contributions and Donations to Section 

527 Organizations by Foreign Nationals. 

• Prohibits foreign nationals from making contributions to 

527 groups. 

This provision strengthens the foreign money ban in 2 U.S.C. 

§ 441e by explicitly prohibiting foreign nationals from making contributions to 527 organizations. Neither the Federal Election Campaign Act nor the Internal Revenue Code specifically bars foreign 

nationals from donating to 527 groups. This provision corrects that 

omission. 

Section 9.—Requiring Section 527 Organizations to Submit Reports under Federal Election Campaign Act of 1971. 

• Requires 527 groups to file reports with the FEC in the 

same manner, under the same terms and conditions, and at 

the same times applicable to federal political committees. 

Section 10.—Permitting Expenditures for Electioneering Communications by Certain Organizations. 

• Permits incorporated 501(c)(4), (c)(5) [labor organizations], 

and (c)(6) [trade associations] to engage in electioneering communications provided such communications are paid for with 

funds donated by individual American citizens. 

This provision repeals the Wellstone Amendment, which restricted electioneering communications by incorporated grassroots 

organizations. The Wellstone Amendment, which was not included 

in the original version of BCRA and which Senators McCain and 

Feingold voted against, prohibited incorporated 501(c) organizations from engaging in electioneering communications on equal 

terms with 527 groups. This provision ends this unfair treatment 

by permitting incorporated 501(c) organizations to make electioneering communications so long as they are funded by contributions 

from individuals. 

Section 11.—Expanding Ability of Corporations and Labor Organizations to Communicate with Members. 

• Allows corporate and labor union PACs to solicit their ‘‘restricted classes’’ using fax machines or e-mail. 

• Removes the ‘‘prior approval’’ restriction on solicitations by 

trade association PACs. 

16 

• Permits more than one trade association to solicit the restricted class of a member company. 

Under current law, trade associations may not solicit contributions from the administrative personnel and stockholders of a 

member company without prior written approval from the company, and a member company may only grant approval to one 

trade association. This provision removes this unnecessary and 

burdensome restriction. 

Moreover, current law permits corporations and labor unions to 

solicit their rank-and-file employees twice a year but only by mail. 

This provision updates the law to allow the use of other common 

delivery methods (such as e-mail or fax). 

Section 12.—Permitting State and Local Parties to Use Nonfederal Funds for Voter Registration and Sample Ballots. • Permits state and local parties to use nonfederal funds for 

voter registration activities and the production, printing, and 

distribution of sample ballots. 

BCRA had the unfortunate effect of federalizing many activities 

that had traditionally been carried out at the state and local level, 

thus resulting in onerous restrictions being placed on state and 

local parties. This provision allows state and local parties to use 

funds permitted under relevant state laws to engage in voter registration activities and to print and distribute sample ballots. 

Section 13.—Clarification of Authorization of Federal Candidates 

and Officeholders to Attend Fundraising Events for State or Local 

Parties. • Permits federal officeholders and candidates to attend and 

participate in state and local party fundraisers without restriction or regulation. 

BCRA included language regarding federal officeholders and candidates participating in state and local party fundraisers. This provision clarifies the original intent of that language, which allows 

federal officeholders and candidates to attend and speak at such 

fundraisers without restriction or regulation. 

Section 14.—Modification of Definition of Public Communication. 

• Excludes Internet communications from being considered 

‘‘public communications.’’ 

This provision protects citizens who engage in the nation’s political dialogue using Internet web sites and blogs from regulation 

under the federal campaign finance laws. 

Section 15.—Treatment of Candidate Communications Containing Endorsement by Federal Candidate or Officeholder. 

• Allows federal officeholders and candidates to endorse 

state, local, or other federal candidates without such endorsements being considered coordinated communications. 

• Permits federal officeholders and candidates to state their 

positions on state or local ballot initiatives or referenda. 

BCRA places unfair and unreasonable restrictions on the ability 

of federal officeholders to fully participate in elections in their 

home states and in the communities they represent. This provision 

allows federal officeholders to endorse state and local candidates 

without such endorsements being considered coordinated contributions that must be paid for with federal hard dollars. It also permits federal officeholders to declare their positions on state ballot 

initiatives and to endorse other federal candidates. 

17 

Section 16.—Severability. • If any portion of the Act is found unconstitutional, the 

other portions will remain in effect. 

Section 17.—Effective Date. • The provisions of the Act shall take effect January 1, 2006. 

COMMITTEE CONSIDER OF THE LEGISLATION

INTRODUCTION AND REFERRAL

On March 15, 2005, Mr. Pence and Mr. Wynn introduced H.R. 

1316, the ‘‘527 Fairness Act of 2005,’’ which was referred to the 

Committee on House Administration. 

HEARINGS

The Committee on House Administration held a hearing on H.R. 

1316 on April 20, 2005. 

Members present: Mr. Ney, Mr. Ehlers, Mr. Doolittle, Mr. Reynolds, Ms. Miller, Ms. Millender-McDonald, Mr. Brady, and Ms. 

Lofgren. 

Witnesses: The Honorable Christopher Shays, Member of Congress; The Honorable Martin Meehan, Member of Congress; The 

Honorable Mike Pence, Member of Congress; The Honorable Albert 

Wynn, Member of Congress; Cleta Mitchell, Partner, Foley & Lardner LLP; Robert Bauer, Partner, Perkins Coie LLP; and Laurence 

E. Gold, Associate General Counsel, AFL–CIO. 

MARKUP

On June 8, 2005, the Committee met to mark up H.R. 1316. The 

Committee favorably reported H.R. 1316, as amended, by a record 

vote (6–3), a quorum being present. 

MATTERS REQUIRED UNDER THE RULES OF THE HOUSE

COMMITTEE RECORD VOTES

Clause 3(b) of House rule XIII requires the results of each record 

vote on an amendment or motion to report, together with the 

names of those voting for and against, to be printed in the committee report. 

Amendment in the nature of a substitute 

Offered by Mr. Ney. The first vote during the markup came on 

the amendment in the nature of a substitute offered by Mr. Ney. 

The amendment lifts the aggregate election-cycle contribution 

limit; removes the limit on expenditures coordinated between party 

committees and candidates; raises the contribution limits for PACs; 

indexes all contribution limits for inflation; permits unlimited 

transfers between leadership PACs and national party committees; 

raises the political committee registration threshold to $10,000; 

prohibits contributions to 527 groups by foreign nationals; requires 

527 groups to report to the FEC; repeals the Wellstone Amendment 

that restricted electioneering communications by grassroots organizations; expands the ability of corporations and labor unions to 

communicate with members; allows state and local parties to use 

nonfederal funds for voter registration activities and sample ballots; clarifies the ability of federal officeholders to attend and parVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\HR146.XXX HR146
18 

ticipate in state and local party fundraisers; amends the Federal 

Election Campaign Act (‘‘FECA’’) to exclude Internet communications from being considered ‘‘public communications’’; allows federal 

officeholders to endorse state, local, and other federal candidates; 

and contains a severability clause. 

The vote on the amendment was 6–3 and the amendment was 

agreed to. 

Member Yes No Present 

Mr. Ney ................................................................................................................................ X — — 

Mr. Ehlers ............................................................................................................................ X — — 

Mr. Mica .............................................................................................................................. X — — 

Mr. Doolittle ........................................................................................................................ X — — 

Mr. Reynolds ....................................................................................................................... X — — 

Ms. Miller ............................................................................................................................ X — — 

Ms. Millender-McDonald ..................................................................................................... — X — 

Mr. Brady ............................................................................................................................ — X — 

Ms. Lofgren ......................................................................................................................... — X — 

Total ........................................................................................................................... 6 3 — 

The Committee then voted on H.R. 1316, as amended. The vote 

on the bill was 6–3 and the bill was agreed to. 

Member Yes No Present 

Mr. Ney ................................................................................................................................ X — — 

Mr. Ehlers ............................................................................................................................ X — — 

Mr. Mica .............................................................................................................................. X — — 

Mr. Doolittle ........................................................................................................................ X — — 

Mr. Reynolds ....................................................................................................................... X — — 

Ms. Miller ............................................................................................................................ X — — 

Ms. Millender-McDonald ..................................................................................................... — X — 

Mr. Brady ............................................................................................................................ — X — 

Ms. Lofgren ......................................................................................................................... — X — 

Total ........................................................................................................................... 6 3 — 

The Committee then voted to favorably report H.R. 1316, as 

amended. The vote to report favorably was approved by a recorded 

vote (6–3). 

Member Yes No Present 

Mr. Ney ................................................................................................................................ X — — 

Mr. Ehlers ............................................................................................................................ X — — 

Mr. Mica .............................................................................................................................. X — — 

Mr. Doolittle ........................................................................................................................ X — — 

Mr. Reynolds ....................................................................................................................... X — — 

Ms. Miller ............................................................................................................................ X — — 

Ms. Millender-McDonald ..................................................................................................... — X — 

Mr. Brady ............................................................................................................................ — X — 

Ms. Lofgren ......................................................................................................................... — X — 

Total ........................................................................................................................... 6 3 — 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) rule XIII of the Rules of the 

House of Representatives, the Committee states that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

19 

GENERAL PERFORMANCE GOALS AND OBJECTIVES

The Committee states, with respect to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, that the goal and objective of H.R. 1316 is to restore fairness and balance to the federal 

campaign finance system. 

CONSTITUTIONAL AUTHORITY

In compliance with clause 3(d)(1) of rule XIII, the Committee 

states that Article 1, Section 4 of the U.S. Constitution grants Congress the authority to make laws governing the time, place and 

manner of holding Federal elections. 

FEDERAL MANDATES

The Committee states, with respect to section 423 of the Congressional Budget Act of 1974, that the bill does not include any 

significant Federal mandate. 

PREEMPTION CLARIFICATION

Section 423 of the Congressional Budget Act of 1974 requires the 

report of any committee on a bill or joint resolution to include a 

committee statement on the extent to which the bill or joint resolution is intended to preempt state or local law. The Committee 

states that H.R. 1316 is not intended to preempt any state or local 

law. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, the following estimate and comparison prepared by the Director of the Congressional Budget Office under section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, June 17, 2005. 

Hon. ROBERT W. NEY, Chairman, Committee on House Administration, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1316, the 527 Fairness 

Act of 2005. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Matthew Pickford (for 

federal costs) and Paige Piper/Bach (for the private-sector impact). 

Sincerely, 

ELIZABETH M. ROBINSON

(For Douglas Holtz-Eakin, Director). 

Enclosure. 

20 

H.R. 1316—527 Fairness Act of 2005 

Summary: H.R. 1316 would make several amendments to the 

Federal Election Campaign Act of 1971. In particular the bill 

would: • Require certain political organizations, as defined by section 527 of the Internal Revenue Code, to file reports with the 

Federal Election Commission (FEC); • Repeal the aggregate limit on campaign contributions by 

individuals; • Raise the limits on transfers between certain political action committees and national party committees; • Remove spending limits on national political parties; • Increase limits on contributions to political action committees and index the limits to inflation; and • Exempt Internet communications from campaign finance 

rules. 

CBO estimates that implementing H.R. 1316 would cost about $1 

million in fiscal year 2006, subject to the availability of appropriated funds. In future years, we estimate that the increased costs 

would not be significant. Enacting the bill also could affect federal 

revenues by increasing collections of fines and penalties for violating campaign finance laws, but CBO estimates that any such increase would not be significant. 

H.R. 1316 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments because the bill would 

specifically exclude state and local elections. H.R. 1316 would impose a private-sector mandate as defined in UMRA on certain political organizations. CBO estimates that the direct cost of the mandate would fall well below the annual threshold established by 

UMRA for private-sector mandates ($123 million in 2005, adjusted 

annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 1316 is shown in the following table. The costs 

of this legislation fall within budget function 800 (general government). 

By fiscal year, in millions of dollars— 

2006 2007 2008 2009 2010 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 1

Estimated Authorization Level ...................................................................... 1 * * * * 

Estimated Outlays ......................................................................................... 1 * * * * 

1 Enacting the bill could also increase revenues, but CBO estimates any such effects would be less than $500,000 a year. 

Note.—* = less than $500,000. 

Basis of estimate: For this estimate, CBO assumes that the bill 

will be enacted near the start of fiscal year 2006 and that spending 

will follow historical patterns for similar programs. 

Based on information from the FEC and subject to the availability of appropriated funds, CBO estimates that implementing 

H.R. 1316 would cost the FEC about $1 million in fiscal year 2006. 

This cost covers the one-time computer-related expenses as well as 

writing new regulations to implement the new provisions of the 

legislation. In future years, the legislation would increase general 

21 

administrative and maintenance costs to the FEC, but we estimate 

that those additional costs would not be significant. 

Enacting H.R. 1316 would likely increase collections of fines and 

penalties for violations of campaign finance law. Such collections 

are recorded in the budget as revenues. CBO estimates that the additional collections of penalties and fines would not be significant. 

Estimated impact on State, local, and tribal governments: H.R. 

1316 contains no intergovernmental mandates as defined in UMRA 

and would impose no costs on state, local, or tribal governments. 

Estimated impact on the private sector: H.R. 1316 would impose 

a private-sector mandate as defined in UMRA on certain political 

organizations. CBO estimates that the direct cost of the mandate 

would fall well below the annual threshold established by UMRA 

for private-sector mandates ($123 million in 2005, adjusted annually for inflation). 

The bill would require certain organizations registered under section 527 of the Internal Revenue Code that are filing financial reports with the Internal Revenue Service to file periodic reports 

with the FEC as well. Based on information from government 

sources, the direct cost of complying with the mandate would be 

minimal. 

Estimate prepared by: Federal Costs: Matthew Pickford. Impact 

on State, Local, and Tribal Governments: Marjorie Miller. Impact 

on the Private-Sector: Paige Piper/Bach. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

FEDERAL ELECTION CAMPAIGN ACT OF 1971 

* * * * * * * 

TITLE III—DISCLOSURE OF FEDERAL CAMPAIGN FUNDS 

DEFINITIONS

SEC. 301. When used in this Act: 

(1) * * * 

* * * * * * * 

(4) The term ‘‘political committee’’ means— 

(A) any committee, club, association, or other group of persons which receives contributions aggregating in excess of 

ø$1,000¿ $10,000 during a calendar year or which makes expenditures aggregating in excess of ø$1,000¿ $10,000 during a 

calendar year; or 

* * * * * * * 

(C) any local committee of a political party which receives 

contributions aggregating in excess of ø$5,000¿ $10,000 during 

a calendar year, or makes payments exempted from the definiVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\HR146.XXX HR146
22 

tion of contribution or expenditure as defined in section 301 (8) 

and (9) aggregating in excess of ø$5,000¿ $10,000 during a calendar year, or makes contributions aggregating in excess of 

ø$1,000¿ $10,000 during a calendar year or makes expenditures aggregating in excess of ø$1,000¿ $10,000 during a calendar year. 

* * * * * * * 

(20) FEDERAL ELECTION ACTIVITY.— 

(A) IN GENERAL.—The term ‘‘Federal election activity’’ 

means— 

ø(i) voter registration activity during the period that 

begins on the date that is 120 days before the date a 

regularly scheduled Federal election is held and ends 

on the date of the election;¿ 

ø(ii)¿ (i) voter identification, get-out-the-vote activity, or generic campaign activity conducted in connection with an election in which a candidate for Federal 

office appears on the ballot (regardless of whether a 

candidate for State or local office also appears on the 

ballot); 

ø(iii)¿ (ii) a public communication that refers to a 

clearly identified candidate for Federal office (regardless of whether a candidate for State or local office is 

also mentioned or identified) and that promotes or 

supports a candidate for that office, or attacks or opposes a candidate for that office (regardless of whether 

the communication expressly advocates a vote for or 

against a candidate); or 

ø(iv)¿ (iii) services provided during any month by an 

employee of a State, district, or local committee of a 

political party who spends more than 25 percent of 

that individual’s compensated time during that month 

on activities in connection with a Federal election. 

(B) EXCLUDED ACTIVITY.—The term ‘‘Federal election activity’’ does not include an amount expended or disbursed 

by a State, district, or local committee of a political party 

for— 

(i) a public communication that refers solely to a 

clearly identified candidate for State or local office, if 

the communication is not a Federal election activity 

described in subparagraph (A)(i) øor (ii)¿; 

* * * * * * * 

(iii) the costs of a State, district, or local political 

convention; øand¿ 

(iv) the costs of grassroots campaign materials, including buttons, bumper stickers, and yard signs, that 

name or depict only a candidate for State or local 

officeø.¿; 

(v) voter registration activities; and 

(vi) the costs incurred with the preparation of a sample ballot for an election in which a candidate for FedVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6603 E:\HR\OC\HR146.XXX HR146
23 

eral office and a candidate for State or local office appears on the ballot. 

* * * * * * * 

(22) PUBLIC COMMUNICATION.—The term ‘‘public communication’’ means a communication by means of any broadcast, 

cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to 

the general public, or any other form of general public political 

advertising. Such term shall not include communications over 

the Internet. 

* * * * * * * 

REPORTS

SEC. 304. (a)(1) * * * 

* * * * * * * 

(13)(A) Except as provided in subparagraph (B), each organization described in section 527 of the Internal Revenue Code of 1986 

shall submit a report under this section in the same manner, under 

the same terms and conditions, and at the same times applicable to 

a political committee which is not an authorized committee of a candidate or a national committee of a political party. 

(B) Subparagraph (A) does not apply to an organization described 

in section 527(j)(5)(B) of the Internal Revenue Code of 1986 (relating 

to a State or local committee of a political party or political committee of a State or local candidate). 

* * * * * * * 

(f) DISCLOSURE OF ELECTIONEERING COMMUNICATIONS.— 

(1) * * * 

* * * * * * * 

(3) ELECTIONEERING COMMUNICATION.—For purposes of this 

subsection— 

(A) * * * 

(B) EXCEPTIONS.—The term ‘‘electioneering communication’’ does not include— 

(i) * * * 

* * * * * * * 

(iv) any other communication exempted under such 

regulations as the Commission may promulgate (consistent with the requirements of this paragraph) to ensure the appropriate implementation of this paragraph, except that under any such regulation a communication may not be exempted if it meets the requirements of this paragraph and is described in øsection 301(20)(A)(iii)¿ section 301(20)(A)(ii). 

* * * * * * * 

LIMITATIONS ON CONTRIBUTIONS AND EXPENDITURES

SEC. 315. (a)(1) Except as provided in subsection (i) and section 

315A, no person shall make contributions— 

24 

(A) * * * 

* * * * * * * 

(C) to any other political committee (other than a committee 

described in subparagraph (D)) in any calendar year which, in 

the aggregate, exceed ø$5,000¿ $7,500; or 

* * * * * * * 

(2) No multicandidate political committee shall make contributions— 

(A) to any candidate and his authorized political committees 

with respect to any election for Federal office which, in the aggregate, exceed ø$5,000¿ $7,500; 

(B) to the political committees established and maintained 

by a national political party, which are not the authorized political committees of any candidate, in any calendar year, 

which, in the aggregate, exceed ø$15,000¿ $25,000; or 

(C) to any other political committee in any calendar year 

which, in the aggregate, exceed ø$5,000¿ $7,500. ø(3) During the period which begins on January 1 of an odd-numbered year and ends on December 31 of the next even-numbered 

year, no individual may make contributions aggregating more 

than— 

ø(A) $37,500, in the case of contributions to candidates and 

the authorized committees of candidates; 

ø(B) $57,500, in the case of any other contributions, of which not more than $37,500 may be attributable to contributions to 

political committees which are not political committees of national political parties.¿ 

(4)(A) The limitations on contributions contained in paragraphs 

(1) and (2) do not apply to transfers between and among political 

committees which are national, State, district, or local committees 

(including any subordinate committee thereof) of the same political 

party. For purposes of paragraph (2), the term ‘‘multicandidate political committee’’ means a political committee which has been registered under section 303 for a period of not less than 6 months, 

which has received contributions from more than 50 persons, and, 

except for any State political party organization, has made contributions to 5 or more candidates for Federal office. 

(B) The limitations on contributions contained in paragraphs (1) 

and (2) do not apply to transfers between a leadership committee of 

an individual holding Federal office and political committees established and maintained by a national political party. For purposes 

of the previous sentence, the term ‘‘leadership committee’’ means, 

with respect to an individual holding Federal office, an unauthorized political committee which is associated with such individual 

but which is not affiliated with any authorized committee of such 

individual. 

* * * * * * * 

(7) For purposes of this subsection— 

(A) * * * 

* * * * * * * 

(C) if— 

(i) * * * 

25 

(ii) subject to paragraph (9), such disbursement is coordinated with a candidate or an authorized committee of such 

candidate, a Federal, State, or local political party or committee thereof, or an agent or official of any such candidate, party, or committee; 

* * * * * * * 

(9)(A) For purposes of paragraph (7)(C), a disbursement for an 

electioneering communication which refers to a candidate for Federal office shall not be treated as a disbursement which is coordinated with such candidate solely on the ground that the communication contains a State or local endorsement or (in the case of a 

communication containing a State or local endorsement) that the 

candidate reviewed, approved, or otherwise participated in the preparation and dissemination of the communication. 

(B) In subparagraph (A), the term ‘‘State or local endorsement’’ 

means, with respect to a candidate for Federal office— 

(i) an endorsement by such candidate of a candidate for State 

or local office or of another candidate for Federal office; or 

(ii) a statement of the position of such candidate on a State 

or local ballot initiative or referendum. 

* * * * * * * 

(c)(1)(A) * * * 

ø(B) Except as provided in subparagraph (C), in any calendar 

year after 2002— 

ø(i) a limitation established by subsections (a)(1)(A), 

(a)(1)(B), (a)(3), (b), (d), or (h) shall be increased by the percent 

difference determined under subparagraph (A); 

ø(ii) each amount so increased shall remain in effect for the 

calendar year; and 

ø(iii) if any amount after adjustment under clause (i) is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100.¿ 

(B) Except as provided in subparagraph (C)— 

(i) in any calendar year after 2002— 

(I) a limitation established by subsection (a)(1)(A), 

(a)(1)(B), (b), or (h) shall be increased by the percent difference under subparagraph (A), 

(II) each amount so increased shall remain in effect for 

the calendar year, and 

(III) if any amount after the adjustment made under subclause (I) is not a multiple of $100, such amount shall be 

rounded to the nearest multiple of $100; and 

(ii) in any calendar year after 2006— 

(I) a limitation established by subsection (a)(1)(C), 

(a)(1)(D), or (a)(2) shall be increased by the percent difference under subparagraph (A), 

(II) each amount so increased shall remain in effect for 

the calendar year, and 

(III) if any amount after the adjustment made under subclause (I) is not a multiple of $100, such amount shall be 

rounded to the nearest multiple of $100. 

(C) In the case of limitations under øsubsections (a)(1)(A), 

(a)(1)(B), (a)(3), and (h)¿ subsections (a) and (h), increases shall 

only be made in odd-numbered years and such increases shall reVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00025 Fmt 6659 Sfmt 6601 E:\HR\OC\HR146.XXX HR146
26 

main in effect for the 2-year period beginning on the first day following the date of the last general election in the year preceding 

the year in which the amount is increased and ending on the date 

of the next general election. 

(2) For purposes of paragraph (1)— 

(A) * * * 

(B) the term ‘‘base period’’ means— 

(i) for purposes of øsubsections (b) and (d)¿ subsection 

(b), calendar year 1974; øand¿ 

(ii) for purposes of subsections (a)(1)(A), (a)(1)(B), 

ø(a)(3),¿ and (h), calendar year 2001ø.¿; and 

(iii) for purposes of subsections (a)(1)(C), (a)(1)(D), and 

(a)(2), calendar year 2005. 

(d)ø(1)¿ Notwithstanding any other provision of law with respect 

to limitations on øexpenditures or limitations on¿ amounts of expenditures or contributions, the national committee of a political 

party and a State committee of a political party, including any subordinate committee of a State committee, may make expenditures 

in connection with the general election campaign of candidates for 

øFederal office, subject to the limitations contained in paragraphs 

(2), (3), and (4) of this subsection¿ Federal office in any amount. 

ø(2) The national committee of a political party may not make 

any expenditure in connection with the general election campaign 

of any candidate for President of the United States who is affiliated 

with such party which exceeds an amount equal to 2 cents multiplied by the voting age population of the United States (as certified 

under subsection (e)). Any expenditure under this paragraph shall 

be in addition to any expenditure by a national committee of a political party serving as the principal campaign committee of a candidate for the office of President of the United States. 

ø(3) The national committee of a political party, or a State committee of a political party, including any subordinate committee of 

a State committee, may not make any expenditure in connection 

with the general election campaign of a candidate for Federal office 

in a State who is affiliated with such party which exceeds— 

ø(A) in the case of a candidate for election to the office of 

Senator, or of Representative from a State which is entitled to 

only one Representative, the greater of— 

ø(i) 2 cents multiplied by the voting age population of 

the State (as certified under subsection (e)); or 

ø(ii) $20,000; and 

ø(B) in the case of a candidate for election to the office of 

Representative, Delegate, or Resident Commissioner in any 

other State, $10,000. 

ø(4) INDEPENDENT VERSUS COORDINATED EXPENDITURES BY

PARTY.— 

ø(A) IN GENERAL.—On or after the date on which a political party nominates a candidate, no committee of the political party may make— 

ø(i) any coordinated expenditure under this subsection with respect to the candidate during the election cycle at any time after it makes any independent 

expenditure (as defined in section 301(17)) with respect to the candidate during the election cycle; or 

27 

ø(ii) any independent expenditure (as defined in section 301(17)) with respect to the candidate during the 

election cycle at any time after it makes any coordinated expenditure under this subsection with respect 

to the candidate during the election cycle. 

ø(B) APPLICATION.—For purposes of this paragraph, all 

political committees established and maintained by a national political party (including all congressional campaign 

committees) and all political committees established and 

maintained by a State political party (including any subordinate committee of a State committee) shall be considered 

to be a single political committee. 

ø(C) TRANSFERS.—A committee of a political party that 

makes coordinated expenditures under this subsection 

with respect to a candidate shall not, during an election 

cycle, transfer any funds to, assign authority to make coordinated expenditures under this subsection to, or receive 

a transfer of funds from, a committee of the political party 

that has made or intends to make an independent expenditure with respect to the candidate.¿ 

* * * * * * * 

(i) INCREASED LIMIT TO ALLOW RESPONSE TO EXPENDITURES

FROM PERSONAL FUNDS.— (1) INCREASE.— (A) * * * 

* * * * * * * 

(C) INCREASED LIMIT.—Except as provided in clause (ii), 

for purposes of subparagraph (A), if the opposition personal funds amount is over— 

ø(i) 2 times the threshold amount, but not over 4 

times that amount— 

ø(I) the increased limit shall be 3 times the applicable limit; and 

ø(II) the limit under subsection (a)(3) shall not 

apply with respect to any contribution made with 

respect to a candidate if such contribution is made 

under the increased limit of subparagraph (A) 

during a period in which the candidate may accept 

such a contribution; 

ø(ii) 4 times the threshold amount, but not over 10 

times that amount— 

ø(I) the increased limit shall be 6 times the applicable limit; and 

ø(II) the limit under subsection (a)(3) shall not 

apply with respect to any contribution made with 

respect to a candidate if such contribution is made 

under the increased limit of subparagraph (A) 

during a period in which the candidate may accept 

such a contribution; and 

ø(iii) 10 times the threshold amount— 

ø(I) the increased limit shall be 6 times the applicable limit; 

ø(II) the limit under subsection (a)(3) shall not 

apply with respect to any contribution made with 

28 

respect to a candidate if such contribution is made 

under the increased limit of subparagraph (A) 

during a period in which the candidate may accept 

such a contribution; and 

ø(III) the limits under subsection (d) with respect to any expenditure by a State or national 

committee of a political party shall not apply.¿ 

(i) 2 times the threshold amount, but not over 4 times 

that amount, the increased limit shall be 3 times the 

applicable limit; 

(ii) 4 times the threshold amount, but not over 10 

times that amount, the increased limit shall be 6 times 

the applicable limit; and 

(iii) 10 times the threshold amount, the increased 

limit shall be 6 times the applicable limit. 

* * * * * * * 

(2) TIME TO ACCEPT CONTRIBUTIONS UNDER INCREASED

LIMIT.— 

(A) IN GENERAL.—Subject to subparagraph (B), a candidate and the candidate’s authorized committee shall not 

accept any contributionø, and a party committee shall not 

make any expenditure,¿ under the increased limit under 

paragraph (1)— 

(i) * * * 

(ii) to the extent that such contribution, when added 

to the aggregate amount of contributions previously 

accepted øand party expenditures previously made¿ 

under the increased limits under this subsection for 

the election cycle, exceeds 110 percent of the opposition personal funds amount. 

(B) EFFECT OF WITHDRAWAL OF AN OPPOSING CANDIDATE.—A candidate and a candidate’s authorized committee shall not accept any contribution øand a party shall 

not make any expenditure¿ under the increased limit after 

the date on which an opposing candidate ceases to be a 

candidate to the extent that the amount of such increased 

limit is attributable to such an opposing candidate. 

* * * * * * * 

MODIFICATION OF CERTAIN LIMITS FOR HOUSE CANDIDATES IN

RESPONSE TO PERSONAL FUND EXPENDITURES OF OPPONENTS

SEC. 315A. (a) AVAILABILITY OF INCREASED LIMIT.— 

(1) IN GENERAL.—Subject to paragraph (3), if the opposition 

personal funds amount with respect to a candidate for election 

to the office of Representative in, or Delegate or Resident Commissioner to, the Congress øexceeds $350,000— 

ø(A) the limit under subsection (a)(1)(A) with respect to 

the candidate shall be tripled; 

ø(B) the limit under subsection (a)(3) shall not apply 

with respect to any contribution made with respect to the 

candidate if the contribution is made under the increased 

limit allowed under subparagraph (A) during a period in 

which the candidate may accept such a contribution; and 

29 

ø(C) the limits under subsection (d) with respect to any 

expenditure by a State or national committee of a political 

party on behalf of the candidate shall not apply.¿ exceeds 

$350,000, the limit under subsection (a)(1)(A) with respect 

to the candidate shall be tripled. 

* * * * * * * 

(3) TIME TO ACCEPT CONTRIBUTIONS UNDER INCREASED

LIMIT.— 

(A) IN GENERAL.—Subject to subparagraph (B), a candidate and the candidate’s authorized committee shall not 

accept any contributionø, and a party committee shall not 

make any expenditure,¿ under the increased limit under 

paragraph (1)— 

(i) * * * 

(ii) to the extent that such contribution, when added 

to the aggregate amount of contributions previously 

accepted øand party expenditures previously made¿ 

under the increased limits under this subsection for 

the election cycle, exceeds 100 percent of the opposition personal funds amount. 

(B) EFFECT OF WITHDRAWAL OF AN OPPOSING CAN- DIDATE.—A candidate and a candidate’s authorized committee shall not accept any contribution øand a party shall 

not make any expenditure¿ under the increased limit after 

the date on which an opposing candidate ceases to be a 

candidate to the extent that the amount of such increased 

limit is attributable to such an opposing candidate. 

* * * * * * * 

CONTRIBUTIONS OR EXPENDITURES BY NATIONAL BANKS, CORPORATIONS, OR LABOR ORGANIZATIONS

SEC. 316. (a) * * * 

(b)(1) * * * 

* * * * * * * 

(4)(A) * * * 

(B) It shall not be unlawful under this section for a corporation, 

a labor organization, or a separate segregated fund established by 

such corporation or such labor organization, to make 2 written solicitations for contributions during the calendar year from any 

stockholder, executive or administrative personnel, or employee of 

a corporation or the families of such persons. A solicitation under 

this subparagraph may be made øonly by mail addressed¿ only by 

communications addressed or otherwise delivered to stockholders, 

executive or administrative personnel, or employees at their residence and shall be so designed that the corporation, labor organization, or separate segregated fund conducting such solicitation cannot determine who makes a contribution of $50 or less as a result 

of such solicitation and who does not make such a contribution. 

* * * * * * * 

(D) This paragraph shall not prevent a trade association or a separate segregated fund established by a trade association from soliciting contributions from the stockholders and executive or administrative personnel of the member corporations of such trade associaVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00029 Fmt 6659 Sfmt 6601 E:\HR\OC\HR146.XXX HR146
30 

tion and the families of such stockholders or personnel øto the extent that such solicitation of such stockholders and personnel, and 

their families, has been separately and specifically approved by the 

member corporation involved, and such member corporation does 

not approve any such solicitation by more than one such trade association in any calendar year¿. 

* * * * * * * 

(c) RULES RELATING TO ELECTIONEERING COMMUNICATIONS.— (1) * * * 

(2) EXCEPTION.—Notwithstanding paragraph (1), the term 

‘‘applicable electioneering communication’’ does not include a 

communication by a øsection 501(c)(4) organization¿ section 

501(c)(4), (5), or (6) organization or a political organization (as 

defined in section 527(e)(1) of the Internal Revenue Code of 

1986) made under section 304(f)(2)(E) or (F) of this Act if the 

communication is paid for exclusively by funds provided directly by individuals who are United States citizens or nationals or lawfully admitted for permanent residence (as defined in 

section 101(a)(20) of the Immigration and Nationality Act (8 

U.S.C. 1101(a)(20))). For purposes of the preceding sentence, 

the term ‘‘provided directly by individuals’’ does not include 

funds the source of which is an entity described in subsection 

(a) of this section. 

(3) SPECIAL OPERATING RULES.— (A) * * * 

(B) EXCEPTION UNDER PARAGRAPH (2).—A øsection 

501(c)(4) organization¿ section 501(c)(4), (5), or (6) organization that derives amounts from business activities or receives funds from any entity described in subsection (a) 

shall be considered to have paid for any communication 

out of such amounts unless such organization paid for the 

communication out of a segregated account to which only 

individuals can contribute, as described in section 

304(f)(2)(E). 

(4) DEFINITIONS AND RULES.—For purposes of this subsection— 

(A) the term ‘‘øsection 501(c)(4) organization¿ section 

501(c)(4), (5), or (6) organization’’ means— 

(i) an organization described in øsection 501(c)(4) of 

the Internal Revenue Code of 1986¿ paragraph (4), (5), 

or (6) of section 501(c) of the Internal Revenue Code of 

1986 and exempt from taxation under section 501(a) of 

such Code; or 

(ii) an organization which has submitted an application to the Internal Revenue Service for determination 

of its status as an organization described in clause (i); 

and 

* * * * * * * 

(5) COORDINATION WITH INTERNAL REVENUE CODE.—Nothing 

in this subsection shall be construed to authorize an organization exempt from taxation under section 501(a) of the Internal 

Revenue Code of 1986 to carry out any activity which is prohibited under such Codeø.¿, or to affect the treatment under 

such Code of any expenditures described in section 527(e) of 

31 

such Code which are made by a section 501(c)(4), (5), or (6) organization. 

ø(6) SPECIAL RULES FOR TARGETED COMMUNICATIONS.— 

ø(A) EXCEPTION DOES NOT APPLY.—Paragraph (2) shall 

not apply in the case of a targeted communication that is 

made by an organization described in such paragraph. 

ø(B) TARGETED COMMUNICATION.—For purposes of subparagraph (A), the term ‘‘targeted communication’’ means 

an electioneering communication (as defined in section 

304(f)(3)) that is distributed from a television or radio 

broadcast station or provider of cable or satellite television 

service and, in the case of a communication which refers 

to a candidate for an office other than President or Vice 

President, is targeted to the relevant electorate. 

ø(C) DEFINITION.—For purposes of this paragraph, a 

communication is ‘‘targeted to the relevant electorate’’ if it 

meets the requirements described in section 304(f)(3)(C).¿ 

* * * * * * * 

CONTRIBUTIONS AND DONATIONS BY FOREIGN NATIONALS

SEC. 319. (a) PROHIBITION.—It shall be unlawful for— 

(1) a foreign national, directly or indirectly, to make— 

(A) * * * 

(B) a contribution or donation to a committee of a political party; øor¿ 

(C) a contribution or donation to an organization described in section 527 of the Internal Revenue Code of 1986; 

or 

ø(C)¿ (D) an expenditure, independent expenditure, or 

disbursement for an electioneering communication (within 

the meaning of section 304(f)(3)); or 

(2) a person to solicit, accept, or receive a contribution or donation described in subparagraph ø(A) or (B)¿ (A), (B), or (C) 

of paragraph (1) from a foreign national. 

* * * * * * * 

SEC. 323. SOFT MONEY OF POLITICAL PARTIES. 

(a) * * * 

(b) STATE, DISTRICT, AND LOCAL COMMITTEES.— 

(1) * * * 

(2) APPLICABILITY.— 

(A) IN GENERAL.—Notwithstanding clause (i) øor (ii)¿ of 

section 301(20)(A), and subject to subparagraph (B), paragraph (1) shall not apply to any amount expended or disbursed by a State, district, or local committee of a political 

party for an activity described in either such clause to the 

extent the amounts expended or disbursed for such activity 

are allocated (under regulations prescribed by the Commission) among amounts— 

(i) * * * 

* * * * * * * 

(e) FEDERAL CANDIDATES.— 

32 

(1) * * * 

* * * * * * * 

(3) FUNDRAISING EVENTS.—Notwithstanding paragraph (1) or 

subsection (b)(2)(C), a candidate or an individual holding Federal office may attend, øspeak,¿ speak without restriction or 

regulation, or be a featured guest at a fundraising event for a 

State, district, or local committee of a political party. 

(4) PERMITTING CERTAIN SOLICITATIONS.— 

(A) GENERAL SOLICITATIONS.—Notwithstanding any 

other provision of this subsection, an individual described 

in paragraph (1) may make a general solicitation of funds 

on behalf of any organization that is described in section 

501(c) of the Internal Revenue Code of 1986 and exempt 

from taxation under section 501(a) of such Code (or has 

submitted an application for determination of tax exempt 

status under such section) (other than an entity whose 

principal purpose is to conduct activities described in 

øclauses (i) and (ii)¿ clause (i) of section 301(20)(A)) where 

such solicitation does not specify how the funds will or 

should be spent. 

(B) CERTAIN SPECIFIC SOLICITATIONS.—In addition to the 

general solicitations permitted under subparagraph (A), an 

individual described in paragraph (1) may make a solicitation explicitly to obtain funds for carrying out the activities described in øclauses (i) and (ii)¿ clause (i) of section 

301(20)(A), or for an entity whose principal purpose is to 

conduct such activities, if— 

(i) * * * 

* * * * * * * 

(f) STATE CANDIDATES.— 

(1) IN GENERAL.—A candidate for State or local office, individual holding State or local office, or an agent of such a candidate or individual may not spend any funds for a communication described in section ø301(20)(A)(iii)¿ 301(20)(A)(ii) unless 

the funds are subject to the limitations, prohibitions, and reporting requirements of this Act. 

* * * * * * * 

(33) 

APPENDIX A 

[From the Washington Post, Nov. 11, 2003] 

SOROS’S DEEP POCKETS VS. BUSH; FINANCIER CONTRIBUTES $5 

MILLION MORE IN EFFORT TO OUST PRESIDENT

(By Laura Blumenfeld) 

NEW YORK.—George Soros, one of the world’s richest men, has 

given away nearly $5 billion to promote democracy in the former 

Soviet bloc, Africa and Asia. Now he has a new project: defeating 

President Bush. 

‘‘It is the central focus of my life,’’ Soros said, his blue eyes settled on an unseen target. The 2004 presidential race, he said in an 

interview, is ‘‘a matter of life and death.’’ 

Soros, who has financed efforts to promote open societies in more 

than 50 countries around the world, is bringing the fight home, he 

said. On Monday, he and a partner committed up to $5 million to 

MoveOn.org, a liberal activist group, bringing to $15.5 million the 

total of his personal contributions to oust Bush. 

Overnight, Soros, 74, has become the major financial player of 

the left. He has elicited cries of foul play from the right. And with 

a tight nod, he pledged: ‘‘If necessary, I would give more money.’’ 

‘‘America, under Bush, is a danger to the world,’’ Soros said. 

Then he smiled: ‘‘And I’m willing to put my money where my 

mouth is.’’ 

Soros believes that a ‘‘supremacist ideology’’ guides this White 

House. He hears echoes in its rhetoric of his childhood in occupied 

Hungary. ‘‘When I hear Bush say, ‘You’re either with us or against 

us,’ it reminds me of the Germans.’’ It conjures up memories, he 

said, of Nazi slogans on the walls, Der Feind Hort mit (‘‘The enemy 

is listening’’). ‘‘My experiences under Nazi and Soviet rule have 

sensitized me,’’ he said in a soft Hungarian accent. 

Soros’s contributions are filling a gap in Democratic Party finances that opened after the restrictions in the 2002 McCain-Feingold law took effect. In the past, political parties paid a large share 

of television and get-out-the-vote costs with unregulated ‘‘soft 

money’’ contributions from corporations, unions and rich individuals. The parties are now barred from accepting such money. But 

non-party groups in both camps are stepping in, accepting soft 

money and taking over voter mobilization. 

‘‘It’s incredibly ironic that George Soros is trying to create a more 

open society by using an unregulated, under-the-radar-screen, 

shadowy, soft-money group to do it,’’ Republican National Committee spokeswoman Christine Iverson said. ‘‘George Soros has 

purchased the Democratic Party.’’ 

34 

In past election cycles, Soros contributed relatively modest sums. 

In 2000, his aide said, he gave $122,000, mostly to Democratic 

causes and candidates. But recently, Soros has grown alarmed at 

the influence of neoconservatives, whom he calls ‘‘a bunch of extremists guided by a crude form of social Darwinism.’’ 

Neoconservatives, Soros said, are exploiting the terrorist attacks 

of Sept. 11, 2001, to promote a preexisting agenda of preemptive 

war and world dominion. ‘‘Bush feels that on September 11th he 

was anointed by God,’’ Soros said. ‘‘He’s leading the U.S. and the 

world toward a vicious circle of escalating violence.’’ 

Soros said he had been waking at 3 a.m., his thoughts shaking 

him ‘‘like an alarm clock.’’ Sitting in his robe, he wrote his ideas 

down, longhand, on a stack of pads. In January, Public Affairs will 

publish them as a book, ‘‘The Bubble of American Supremacy’’ (an 

excerpt appears in December’s Atlantic Monthly). In it, he argues 

for a collective approach to security, increased foreign aid and ‘‘preventive action.’’ 

‘‘It would be too immodest for a private person to set himself up 

against the president,’’ he said. ‘‘But it is, in fact’’—he chuckled— 

‘‘the Soros Doctorine.’’ 

His campaign began last summer with the help of Morton H. 

Halperin, a liberal think tank veteran. Soros invited Democratic 

strategists to his house in Southampton, Long Island, including 

Clinton chief of staff John D. Podesta, Jeremy Rosner, Robert 

Boorstin and Carl Pope. 

They discussed the coming election. Standing on the back deck, 

the evening sun angling into their eyes, Soros took aside Steve 

Rosenthal, CEO of the liberal activist group America Coming Together (ACT), and Ellen Malcolm, its president. They were proposing to mobilize voters in 17 battleground states. Soros told them 

he would give ACT $10 million. 

Asked about his moment in the sun, Rosenthal deadpanned: ‘‘We 

were disappointed. We thought a guy like George Soros could do 

more.’’ Then he laughed. ‘‘No, kidding! It was thrilling.’’ 

Malcolm: ‘‘It was like getting his Good Housekeeping Seal of Approval.’’ 

‘‘They were ready to kiss me,’’ Soros quipped. 

Before coffee the next morning, his friend Peter Lewis, chairman 

of the Progressive Corp., had pledged $10 million to ACT. Rob 

Glaser, founder and CEO of RealNetworks, promised $2 million. 

Rob McKay, president of the McKay Family Foundation, gave $1 

million and benefactors Lewis and Dorothy Cullman committed 

$500,000. 

Soros also promised up to $3 million to Podesta’s new think tank, 

the Center for American Progress. 

Soros will continue to recruit wealthy donors for his campaign. 

Having put a lot of money into the war of ideas around the world, 

he has learned that ‘‘money buys talent; you can advocate more effectively.’’ 

At his home in Westchester, N.Y., he raised $115,000 for Democratic presidential candidate Howard Dean. He also supports 

Democratic presidential contenders Sen. John F. Kerry (Mass.), retired Gen. Wesley K. Clark and Rep. Richard A. Gephardt (Mo.). 

35 

In an effort to limit Soros’s influence, the RNC sent a letter to 

Dean Monday, asking him to request that ACT and similar organizations follow the McCain-Feingold restrictions limiting individual 

contributions to $2,000. 

The RNC is not the only group irked by Soros. Fred Wertheimer, 

president of Democracy 21, which promotes changes in campaign finance, has benefited from Soros’s grants over the years. Soros has 

backed altering campaign finance, an aide said, donating close to 

$18 million over the past seven years. 

‘‘There’s some irony, given the supporting role he played in helping to end the soft money system,’’ Wertheimer said. ‘‘I’m sorry 

that Mr. Soros has decided to put so much money into a political 

effort to defeat a candidate. We will be watchdogging him closely.’’ 

An aide said Soros welcomes the scrutiny. Soros has become as 

rich as he has, the aide said, because he has a preternatural instinct for a good deal. Asked whether he would trade his $7 billion fortune to unseat 

Bush, Soros opened his mouth. Then he closed it. The proposal 

hung in the air: Would he become poor to beat Bush? 

He said, ‘‘If someone guaranteed it.’’ 

(36) 

APPENDIX B 

[From the New York Times; Jul. 29, 2004] 

A DELEGATE, A FUND-RAISER, AND A VERY FINE LINE

(By Jim Rutenberg and Glen Justice) 

BOSTON.—Harold M. Ickes is a founder of an organization created to help defeat President Bush this fall, a group that he emphasizes operates wholly independently of the campaign of Senator 

John Kerry and the Democratic National Committee. 

But that has not stopped him from courting some of the Democrats’ wealthiest donors here at the Four Seasons, a nexus of party 

operatives, Kerry campaign officials and friendly celebrities gathered for the party’s convention this week. In a luxurious suite 

where guests nibble on chocolate ganache tarts and sip espresso, he 

asks them to give and give more. 

Then, in the evenings, this onetime White House deputy chief of 

staff throws on his credentials as a Democratic Party superdelegate 

and joins party functionaries gathered for the Democratic convention at the FleetCenter as one of their own. 

Just how precisely this squares with the new campaign finance 

law that allows such groups, known as 527 organizations, to raise 

unlimited sums for politics so long as they do not coordinate with 

the candidates or the national parties depends on how much one 

takes Mr. Ickes’s word about the distance between him and the 

Democrats. 

Advocates for stronger fund-raising regulation say that Mr. 

Ickes’s four-star road show provides the most vivid example yet of 

how he and leaders of groups like his have all year been flouting 

the new fund-raising laws, drafted to stanch the flow of unlimited 

donations to parties and candidates. 

But Mr. Ickes and his colleagues say they are well within the 

boundaries of the law, and they are unapologetic. They say they 

are in no way coordinating their activities with the many party and 

campaign officials with whom they are rubbing elbows so frequently here this week, simply legally fishing for dollars in a fully 

stocked pond. 

‘‘We are here talking to donors,’’ said Mr. Ickes, who was known 

for his command of fund-raising details and the fund-raising law 

back when he worked for President Bill Clinton. 

‘‘We can talk to them anywhere—and we find this is a very efficient, effective place to talk to them,’’ Mr. Ickes said. 

Erik Smith, head of the group Mr. Ickes founded, The Media 

Fund, put it more starkly: ‘‘To quote Willie Sutton, ‘You rob banks 

because that’s where the money is.’’’ 

37 

When the new campaign finance law was debated in Congress its 

supporters argued that it would cut the tie between big money contributors and lawmakers. Its opponents countered that it would 

drive that money away from the national parties and into other, 

more opaque, affiliated groups that would operate like shadow political parties. 

The scene at the Four Seasons this week has shown just how 

close to the line of independence groups like The Media Fund— 

which has been running advertisements against President Bush 

since March—can come. 

Just down the hallway from Mr. Ickes’s second-floor suite in the 

Wendell Phillips Room is the registration office in the Winthrop 

Room, where fund-raisers pick up their special-access passes. As 

Mr. Ickes mingled with passers-by outside of his suite Wednesday 

afternoon, a parade of campaign and party officials walked by, including Bob Shrum, Mr. Kerry’s chief strategist. Mr. Shrum and 

Mr. Ickes have worked on campaigns together like the David N. 

Dinkins New York mayoral campaigns of 1989 and 1993. 

Mr. Smith was also right near longtime comrades-in-arms. While 

Mr. Smith sat at a table in the Four Seasons lounge speaking with 

a reporter on Tuesday, Steve Elmendorf, Mr. Kerry’s deputy campaign manager, who is staying at a nearby hotel, passed by the 

window. Mr. Elmendorf was a senior adviser for the presidential 

campaign of Representative Richard A. Gephardt of Missouri last 

fall when Mr. Smith was its press secretary. 

The proximity is hardly by chance. The hotel is not just the base 

of operation for Mr. Smith, Mr. Ickes and yet another group for 

which Mr. Ickes is raising money, America Coming Together, but 

has also become a salon for top fund-raisers in the Kerry campaign 

and the Democratic Party. 

Mr. Ickes’s hospitality suite, just up a sweeping staircase from 

the hotel lounge, is open to all—all, that is, but the news media. 

On Tuesday a reporter who was barred at the door spied Bill Press, 

the liberal former co-host of ‘‘CNN Crossfire,’’ mingling with visitors and signing copies of his book, ‘‘Why Bush Must Go: Top 10 

Reasons Why George Bush Doesn’t Deserve a Second Term.’’ (‘‘I 

was glad to do it, they bought the books and gave them out to donors,’’ he said.) On Wednesday, Donna Brazile, the campaign manager for Al Gore in 2000, did the same, with her own book. 

‘‘People are coming in and we are grabbing them in the halls,’’ 

said Ellen Malcolm, president of America Coming Together, who 

said she had met with more than 100 supporters at the hotel. 

But the intermingling of the avowed independent groups and 

Democratic officials is not restricted to the Four Seasons here. Environment 2004, an organization that runs a 527 committee held 

a reception to thank donors on Monday at the Beacon Hill home 

of Cathy Douglas Stone, a Boston environmental activist. Among 

those who spoke were the columnist Arianna Huffington, the singer 

Carole King and Senator Maria Cantwell of Washington. 

On Monday Ms. Malcolm was on hand at an event honoring Representative Nancy Pelosi of California, the House minority leader, 

that drew dozens of lawmakers and major donors together to drink 

lemonade and iced tea in a garden atrium of the Isabella Stewart 

38 

Gardner museum. Later that night, Ms. Malcolm, like Mr. Ickes, 

was on the convention floor. 

And Mr. Ickes is not the only official of a 527 group with delegate status. Simon Rosenberg, head of the New Democrat Network, 

a group running Spanish-language advertisements against Mr. 

Bush since March, said he sits on the convention’s platform committee. 

It is all too much for campaign finance regulation advocates who 

pushed for the new rules and are here this week, too, to take it all 

in. ‘‘They’re supposed to be independent groups operating independently of the Democratic Party and the Kerry presidential campaign,’’ said Fred Wertheimer, president of Democracy 21, a group 

which advocated for the new law. ‘‘Instead, they’re going out of 

their way to brazenly and blatantly demonstrate that they are 

intertwined with the Democratic Party and the Democratic nominating convention.’’ 

Mr. Ickes replies that while he interacts with his old friends in 

Mr. Kerry’s campaign, ‘‘I talk to them, but I don’t talk to them 

about their spending, they don’t talk to me about our spending.’’ He 

said, ‘‘We are very arm’s length—not Chinese wall, but brick wall.’’ 

He added of his role as a delegate to the Democratic National Committee, that it is a position he is allowed to hold under campaign 

finance regulations. 

He has particularly drawn the ire of Mr. Wertheimer, who has 

filed complaints against the groups he is fund-raising for with the 

Federal Election Commission, complaints that are pending. The 

Media Fund has been credited with playing a crucial role in helping to beat back an advertising barrage that President Bush 

launched against Mr. Kerry when he emerged the winner of the 

Democratic primary season—and nearly broke. It has spent $28 

million on advertisements against Mr. Bush in key states. 

With Mr. Kerry announcing that he will not run advertisements 

in August to save money for the fall, The Media Fund announced 

that it, in turn, would increase its advertising next month—another example, critics say, of how closely its strategy is tied to that 

of Mr. Kerry’s campaign. 

Ms. Malcolm said she was downright angered by implications 

that she was doing anything untoward. ‘‘It makes me mad and it 

personally offends me that people are implying that we are doing 

something wrong,’’ she said. ‘‘All we’re trying to do is comply with 

the law.’’ 

Mr. Wertheimer said that at the very least, she and her colleagues should do a better job looking as if they were. ‘‘The perception here is there’s a marriage taking place,’’ he said. 

(39) 

APPENDIX C 

COMMENTS OF MARK BREWER, PRESIDENT, ASSOCIATION OF STATE

DEMOCRATIC CHAIRS

ON PROPOSED REGULATIONS DEFINING FEDERAL ELECTION ACTIVITY

AND ON THE PROPOSED REGULATION GOVERNING ALLOCATION OF

SALARIES BY STATE AND LOCAL PARTY COMMITTEES

On behalf of the Association of State Democratic Chairs, I am 

submitting comments on the proposed revision of the definition of 

federal election activity and on the treatment of certain salaries 

and wages paid by state, district and local party committees. Because these two rulemakings are related and will have substantial 

impact on operation of political parties at the state and local level, 

I have combined my comments into one document that I will file 

separately in each proceeding. 

The Commission initiated these rulemakings in response to 

United States District Court’s decision in Shays v. Federal Election 

Commission. The District Court in overturning the Commission’s 

regulation faulted the Commission for various shortcomings in the 

rulemaking process including failing to provide sufficient notice of 

the alternatives being considered, to explain the Commission’s 

choice of rules and to demonstrate why the promulgated rules were 

consistent with the legislative objectives of Bipartisan Campaign 

Reform Act (BCRA). Each of these failings, should the appeals 

court agree that they were failings, is understandable given the 

compressed time period in which the Commission was required to 

act, the statute’s use of vague undefined terms and the paucity of 

legislative history on critical aspects of the law. These procedural 

weaknesses in the promulgation of the Commission rules should 

not be considered as proof of substantive flaws in the rules themselves. 

In fact, the regulations that are now subject to Commission reconsideration are for the most part not only reasonable but in 

many instances to be preferred to alternatives that the Commission 

is now considering. The existing rules are easier to understand and 

take into account the daily practicalities of running a state or local 

committee. State and local party committees operate in a very complex regulatory environment. No other political committees are 

asked to manage such Byzantine rules. The proposed alternatives 

suggested in these rulemakings would impose even more complexity on state and local parties. The consequence of adopting 

some of these alternatives would be to push to the breaking point 

the ability of many party committees to comply. 

An unfortunate consequence of BCRA is that many state and 

local party committees are avoiding participating in grassroots poVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00039 Fmt 6604 Sfmt 6604 E:\HR\OC\HR146.XXX HR146
40 

litical activity because federa1 law poses compliance challenges 

that are beyond their ability to meet. If the Commission doubts 

that this is the case, it need only review how many federal reporting party committees received and spent Levin funds. Levin funds 

were intended to allow state and local parties to use nonfederal 

funds to finance grassroots activity. The fact that very few committees took advantage of Levin funds is testament to the fact that the 

rules were just too complex for state and local parties to comply. 

If these committees were able to marshal sufficient federal funds 

to pay for voter registration, voter identification and get-out-thevote programs, this consequence of BCRA would be less regrettable. 

However, this was not the case, particularly at the local level and 

in states that were not Presidential targets. Instead of running the 

risk of violating federal law, many committees simply did not engage in federal election activity. 

Changing the rules as suggested in these rulemakings will only 

compound the problem. The thrust of the proposed rules is to subject more grassroots party activity to federal regulation. Subjecting 

more party activity to the complex allocation and reporting requirements of federal law will only accelerate the flow of these activities 

out of the party into less accountable political organizations. The 

changes proposed proceed from a basic misunderstanding of how 

local parties now operate. 

Local parties operate largely autonomously from the state and 

national committees. Most local committees are small volunteer 

centered organizations. These committees do not have nor could 

they afford the lawyers and accountants that have become necessary to comply with complexity of federal law. A common response to BCRA then was to avoid any activity that would trigger 

federal reporting obligations. These committees were advised to 

avoid engaging in voter registration, not to undertake any get-outthe-vote activity and to devote all paid staff to local elections. For 

most local committees, this was the only available survival strategy. Now some of the Commission’s proposals will close off even 

this avenue. Below the alternatives offered in these rulemakings 

are explored and their shortcomings noted. 

In response to the District Court’s concern that limiting the definition of voter registration to assisting voters in the actual act of 

registering may be too limiting and may ‘‘unduly compromise the 

Act’s purposes’’, the Commission asks whether encouraging someone to register combined with some direction on how one registers 

should be included in the definition. Expanding the definition in 

this way would cover a voter calling his local party headquarters 

and asking where they could register. It would cover placing a 

stack of voter registration cards at the front desk. Presumably it 

would cover a party website where registration materials are available. Local committees that no longer register voters because they 

cannot practically comply with BCRA will be reduced to silence 

when a voter asks how or where to register. The practical consequence of expanding the definition of voter registration will be to 

mute core political speech. 

The Commission also seeks comments on whether it should reconsider the definition of get-out-the-vote activity. The Commission 

notes that Congress did not provide a definition. The District Court 

41 

correctly pointed out that the list of get-out-the-vote activity is not 

exhaustive and questioned what additional activity might be included. In response to the Court’s decision, the Commission should 

make the list exhaustive. State and local party committees and 

groups of state and local candidates that are governed by this regulation are entitled to a clear and full statement of the governing 

rule. 

This regulation substantially impacts the right of state and local 

candidates to associate in their election efforts. In providing a list 

of covered activities the Commission should keep the list narrow. 

A broad reading of what constitutes get-out-the-vote activity will 

severely impair the ability of local candidates to join in common effort to effect a shared political outcome. For local party committees 

a broad reading will shrink even further the political playing field. 

Without additional Congressional direction, the Commission should 

be chary of extending its jurisdiction over a broader swath of local 

candidate activity. The fact that the Commission has yet to provide 

state and local candidates with sufficient instruction and tools to 

comply with the existing regulation underscores the folly of expanding the range of covered activity. 

Again in response to the District Court’s decision, the Commission proposes to redefine ‘‘voter identification’’. The proposed definition covers the acquisition ‘‘of information about potential voters including, but not limited to, obtaining voter lists and creating or enhancing voter lists by verifying or adding information about the 

voter’s likelihood of voting in an upcoming election or their likelihood of voting for specific candidates.’’ This definition proceeds 

from a basic misunderstanding of how modern political parties operate. Political committees maintain or purchase access to large 

databases of people living in the United States. These databases 

are constantly sorted using various demographic, economic and personal criteria. New information is regularly appended or employed 

depending on the purpose that the database is being used. 

Because nearly every resident of the country is a potential voter, 

the proposed regulation would cover any and all uses of a party 

database. These databases are employed in fundraising, persuasion, volunteer recruitment and for a host of other purposes beyond 

get-out-the-activity. On the other hand, the term ‘‘voter identification’’ in the general political lexicon is used to refer to those activities, most commonly canvassing, that are undertaken in close proximity to the election to identify specific voters to target in a ‘‘getout-the-vote’’ effort. Although not defined in BCRA, this is how the 

statute appears to use the term. The statute defines federal election activity to include ‘‘(ii) voter identification, get-out-the-vote activity, or generic campaign activity conducted in connection with an 

election in which a candidate for Federal office appears on the ballot’’. Clearly the term is used in a restricted manner. It is addressed to activity tied directly to a Federal election and similar to 

or connected with the other activities cited. There is no statutory 

justification for giving a broader sweep to the term. There is no 

reason to expand the definition to cover all uses or additions to a 

database. 

The Association commends the Commission for proposing to 

rededefine the definition of ‘‘in connection with an election in which 

42 

a candidate for federal office appears on the ballot.’’ The new definition recognizes that state and local committees spend much and 

in some cases all their time and money on local elections. In many 

states, years can pass between true federal contests. The focus of 

local parties is most often on municipal elections. The proposed regulation recognizes this fact and seeks to limit the federalization of 

state and local party activity that is directed at municipal elections. 

The Association urges its adoption. 

Lastly the Commission proposes revising the rule governing the 

allocation of salaries and wages by requiring state and local committees to allocate at least 25% of these costs to a Federal account 

whenever an employee engages in any Federal election activity or 

activity in connection with a Federal election. As explained above, 

most local committees are focused on state and local elections. 

These committees do not register with the Commission and do not 

maintain Federal and state accounts. They take care to avoid being 

subject to the recordkeeping, registration, reporting and allocation 

requirements of Federal law. The proposed regulation imposes 

these Federal obligations even where the Federal election activity 

is minimal. For example, the allocation requirement would be triggered if a staffer for a local committee in a college town spent a 

single day on campus registering students to vote. It is not enough 

that to be told that the Commission is unlikely to pursue such a 

violation. Party committees are not in the business of instructing 

their employees to disrespect the law because the committee is 

likely to escape punishment for violating the law. 

The District Court expressed concern that the current regulation 

opens an opportunity for gross abuse is mere speculation without 

any support in the legislative or administrative record. First, state 

and local committees simply do not employ sufficient numbers of 

staff to cleverly assign them monthly duties to assure that each 

stays below the 25% threshold. Second, where there is a highly contested Federal election in which a state or local committee is participating, the committee staff assigned to work on that race will 

devote more than 25% of their time to that race and therefore, will 

be 100% allocated to the Federal account. The consequence will be 

over allocation which will more than compensate for any under allocation of other employees. If the Commission needs to be convinced of this fact, it should do a study of state and local committee 

staffing patterns. It should not proceed to further handicap local 

parties based on unfounded speculation of undocumented abuse. A 

review of state and local party activity in the last election will demonstrate that the District Court’s concern found no expression in 

actual party activity. 

In closing, the proposed regulations are rooted in a basic misapprehension of the nature of state and local committees. These are 

not committees flush with resources and staffed with well paid professionals. Rarely is a Federal candidate in a position to control a 

committee. Federal elections are not their primary focus and as 

often as not the Federal election receives minimal, if any attention. 

The Commission can easily confirm these facts. The Commission’s 

regulations should reflect what state and local committees actually 

do, rather than unfounded fears of wholesale circumvention of the 

law. Facts rather than wildly imagined corruptive schemes should 

43 

guide the Commission. Visit a few local party committees and any 

fears will be allayed. Add to the complexity of the regulation and 

there will be fewer to visit. 

(44) 

MINORITY VIEWS OF RANKING MEMBER JUANITA 

MILLENDER-MCDONALD, REPRESENTATIVE ROBERT A. 

BRADY, AND REPRESENTATIVE ZOE LOFGREN 

The House Administration Committee ordered H.R. 1316 reported on a 6–3 vote. In our view, H.R. 1316 as a whole is not 

needed and does not accomplish the objectives that the Majority 

purports are needed to level the playing field between the major 

parties and 527 organizations. The bill also would increase the 

undue influence of a few wealthy individuals by repealing the aggregate limits on contributions. In essence, it rolls back not only 

the reforms of the Bipartisan Reform Act of 2002 (BCRA), but the 

Federal Election Campaign Act of 1971 (FECA), as amended in 

1974, which placed limits on political contributions to candidates 

for federal elective office by an individual or a group, which were 

enacted in the wake of the Watergate scandals. 

PREFACE

H.R. 1316, under the pretext of addressing the need to regulate 

independent political organizations, will enhance the considerable 

financial advantage already enjoyed by the majority party and incumbent office holders. Some of the bill’s provisions do so in such 

an obvious, flagrant manner that the constitutionality of H.R. 1316 

is put into serious doubt. Nowhere is the constitutional defect more 

obvious than in section 6 of the bill, which allows Federal officeholders, and only Federal officeholders, the right to create special 

‘‘leadership’’ committees, which in turn can make unlimited transfers to national party committees. H.R. 1316 denies challengers 

this new perquisite of incumbency. Even if this defect were remedied by extending the privilege to non-officeholders, it would be an 

empty gesture because few challengers would be able to take advantage of it. 

H.R. 1316 is motivated by fear more than fact. Spending by independent political organizations in 2004 congressional races was a 

traction of what the Republican Party was able to marshal in response. It is this immense partisan financial advantage that this 

bill is intended to secure. By removing effectively any limit on what 

an individual may contribute to a political party, and any limit on 

how that money can be spent, H.R. 1316 is intended to entrench 

party power. BCRA imposed soft money limits on parties, while 

H.R. 1316 removes them. Under H.R. 1316, the only limit on how 

much an individual may contribute in response to a party’s, or a 

candidate’s solicitation, is the creativity of the solicitor. Current 

law permits individuals to contribute over one hundred thousand 

dollars in an election cycle. The only people that will benefit from 

the removal of this limit are multi-millionaires and the party that 

most caters to them. 

45 

It is instructive to note that the 527 activity that this bill appears most concerned about is the voter registration and get-outthe-vote activity that was not directed at particular Congressional 

candidates but at increasing participation. The supporters of H.R. 

1316 may be troubled by this development, but it is far from clear 

that the public is. With both major political parties raising record 

sums in 2004, it is hard to discern the unfairness that the H.R. 

1316 seeks to correct. Greater participation in elections, and more 

competitive elections, are not the hallmarks of a problem in need 

of a remedy. Recent Republican Party fundraising certainly should 

reassure the supporters of this bill that their party will continue 

to enjoy a sizable financial advantage, and will be able to come to 

their financial rescue at the first sign of any vulnerability. 

H.R. 1316’s drive for ‘‘fairness’’ goes beyond enhancing the huge 

financial advantage already enjoyed by the party in power, to a 

concern about the ability of trade associations to circumvent the 

electioneering communications limitations of BCRA. Apparently the 

sponsors of H.R. 1316 do not believe that the managers of trade associations have sufficient freedom to employ the considerable resources and ingenuity of their trade associations to influence federal elections. H.R. 1316 removes the BCRA ban on electioneering 

communications by trade associations, and allows them to use individual membership dues and payments to fiance television and 

radio advertising attacking or promoting a federal candidate. To assure that trade associations can raise sufficient funds for this and 

other elections purposes, H.R. 1316 removes long standing restrictions on trade association solicitations. It is easy to see how these 

changes will play to the great advantage of incumbents and the 

party in power. 

The provisions of H.R. 1316, as a whole, are problematic and inconsistent with BCRA and FECA. We find that this bill has little 

to do with 527s, but everything to do with allowing the parties to 

collect more money from a few wealthy contributors. If H.R. 1316 

becomes law, it will have the devastating effect of diluting the political voice of people of modest means, while magnifying the influence of wealthy contributors who, without the current restrictions, 

would be free to direct their wealth to a vast range of interests 

they support. 

This bill is most disturbing because it is such a blatant attempt 

to advantage incumbents and the majority party. As such, it is an 

abuse of power and a breach of the people’s trust. Below is a more 

detailed review of this badly defective bill. 

PRINCIPAL FLAWS

REPEAL OF AGGREGATE LIMIT ON CONTRIBUTIONS BY INDIVIDUALS

Repealing the aggregate limits on contributions by individuals 

will allow the wealthy populace to give millions of dollars to candidates and parties. Currently, an individual can give up to 

$101,400 to all political parties, PAC committees and candidates in 

a two year Federal election cycle. This amounts to a limit of 

$40,000 an individual can give to Federal candidates and $61,400 

to political parties, and PAC committees. H.R. 1316 would allow an 

individual to give $160,200 to the three national committees of a 

46 

political party, $1 million to the state party committees of that 

party ($20,000 to each of the 50 state party committees) and 

$1,827,000 to each of the 435 house races for a particular party; for 

a total of almost $3 million. Fundamentally, it strips away the protections implemented by the FECA aggregate restrictions, which 

were put in place as a direct result of the Watergate scandals. We 

voted for BCRA to break the link between Federal officeholders and 

candidates, and the undue influence of unregulated money given by 

wealthy individuals. This provision would re-open the door to individuals giving million-dollar contributions to federal officeholders 

and candidates for federal elections, in essence opening the ‘‘hard 

money’’ floodgates and converting ‘‘hard money’’ into ‘‘soft money’’. 

REPEAL OF LIMIT ON AMOUNT OF PARTY EXPENDITURES ON BEHALF

OF CANDIDATES IN GENERAL ELECTIONS

By removing the caps on coordinated expenditures, H.R. 1316 

would allow a national party committee to completely underwrite 

multi-million dollar campaign(s) against any candidate(s) that it 

targets. Essentially, this provision would allow a political party to 

coordinate and spend unlimited amounts to support or defeat a 

candidate. Should this provision become law, unlimited resources 

will be put at the disposal of any vulnerable candidate who happens to be a member of the party in power? This legislation should 

not be passed for partisan gain. 

PERMITTING TRANSFERS BETWEEN LEADERSHIP COMMITTEES AND

NATIONAL PARTY COMMITTEES

H.R. 1316 would allow any Member of Congress to make unlimited transfers from their leadership PACs to national party committees. That Member of Congress could then control the spending of 

these transferred funds to support the Member’s own campaign. 

Under current law, Members’ leadership PAC funds are not supposed to be spent on the Member’s campaign. 

Donors could give the maximum contribution allowed for a candidate’s campaign and the maximum contribution allowed for a 

Member’s leadership PAC, and all of these funds could end up 

being spent by the candidate on the candidate’s campaign. As noted 

above, only incumbents enjoy this privilege. Contribution limits 

long an essential feature of the law are rendered meaningless. 

Members from noncompetitive districts holding positions of leadership in the House, and on committees, will be able to use their considerable legislative clout to raise, and to place at a vulnerable 

Member’s disposable, almost unlimited funds. Few challengers, 

whether in a primary or a general election, will enjoy such a rich 

financial advantage. For them, the ‘‘Fairness’’ referenced in the 

title of this bill, will be forever elusive. 

PERMITTING EXPENDITURES FOR ELECTIONEERING COMMUNICATIONS

BY CERTAIN ORGANIZATIONS

H.R. 1316 would undermine a key BCRA restriction to prevent 

the use of non-federal money, more commonly referred to as ‘‘soft 

money’’, to fund deceptive issue ads. Under this bill, trade associations would once more be allowed to use unlimited ‘‘soft money’’ doVerDate Aug 04 2004 20:18 Jun 26, 2005 Jkt 039006 PO 00000 Frm 00046 Fmt 6604 Sfmt 6602 E:\HR\OC\HR146.XXX HR146
47 

nations from individuals to pay for broadcast ads promoting and attacking federal candidates close to an election. Again, it is hard to 

imagine how this change will do anything other than benefit incumbents and the party in power. 

CONCLUSION

The proponents of this legislation are among the strongest opponents of BCRA, and are using public concern over 527’s as a pretext for rolling back BCRA and the reforms put in place after the 

Watergate scandals. Passage of this bill would be a huge step backwards towards the unregulated six and seven figure donations 

which were common before BCRA became law. BCRA was intended 

to end this practice, and its perceived effect on the shaping of public policy to the benefit of the wealthy and influencial. 

We stand in agreement with a recent letter written by the Democratic leadership stating that limiting total campaign giving has 

been a cornerstone of fair and honest campaigns for a generation, 

and one of the most effective ways to prevent corruption and the 

appearance of corruption in our political process, and in the process 

of governing and shaping public policy. 

Democrats have stood proudly as the party of reform. H.R. 1316 

is a direct assault on this principle, and a step backwards into the 

preception of unseemliness at best, and influence peddling at its 

worst. Perceptions do matter, and H.R. 1316 should not become 

law. 

JUANITA MILLENDER-MCDONALD. 

ROBERT A. BRADY. 

ZOE LOFGREN. 

Æ