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22–244 2005

MARKUP OF H.R. 1316 

THE 527 FAIRNESS ACT OF 2005 

MARKUP 

BEFORE THE

COMMITTEE ON HOUSE 

ADMINISTRATION 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

FIRST SESSION 

MARKUP HELD IN WASHINGTON, DC JUNE 8, 2005 

( 

Printed for the Use of the Committee on House Administration 

(II) 

COMMITTEE ON HOUSE ADMINISTRATION 

BOB NEY, Ohio, Chairman 

VERNON J. EHLERS, Michigan 

JOHN L. MICA, Florida 

CANDICE MILLER, Michigan 

JOHN T. DOOLITTLE, California 

THOMAS M. REYNOLDS, New York 

JUANITA MILLENDER-MCDONALD, 

California 

Ranking Minority Member 

ROBERT A. BRADY, Pennsylvania 

ZOE LOFGREN, California 

PAUL VINOVICH, Staff Director 

GEORGE SHEVLIN, Minority Staff Director 

(1) 

MARKUP OF H.R. 1316, THE 527 FAIRNESS ACT 

OF 2005 

WEDNESDAY, JUNE 8, 2005 

HOUSE OF REPRESENTATIVES, COMMITTEE ON HOUSE ADMINISTRATION, Washington, DC. 

The committee met, pursuant to call, at 4:00 p.m., in room 1310, Longworth House Office Building, Hon. Robert W. Ney (chairman 

of the committee) presiding. Present: Representatives Ney, Ehlers, Mica, Miller, Millender- McDonald, Brady, and Lofgren. Staff Present: Paul Vinovich, Staff Director; Matt Peterson, 

Counsel; Chris Otillio, Professional Staff; George Shevlin, Minority 

Staff Director; Charles Howell, Minority Chief Counsel; Tom Hicks, 

Minority Professional Staff; and Matt Pinkus, Minority Professional Staff. 

The CHAIRMAN. The meeting will come to order. We are expecting minority members of the Committee to be here within a couple of 

minutes, so we will go ahead and begin with opening statements. 

And the Committee is now in order for the purpose of consideration 

of H.R. 1316, the 527 Fairness Act of 2005. 

The Bipartisan Campaign Reform Act, known as BCRA, threw 

our Federal campaign system out of balance when it passed 3 years 

ago. Despite the claims of its proponent, BCRA did not ban soft 

money, but merely diverted its flow. Power and influence were 

shifted to unaccountable, ideologically driven outside groups; and 

our political parties, I believe, were weakened as a result. 

Additionally, the first amendment rights of individuals and associations were trampled upon as a result of BCRA’s many onerous 

restrictions and harsh criminal penalties, and yet for reasons I will 

never understand, the supporters of BCRA crow about how all this 

represents progress. Confronted by the failures of the law they supported, BCRA supporters now propose even more government 

clampdowns on political speech. For them, reform has only one 

meaning, more regulation. 

I do believe there is a better approach. Today, I will be offering 

an amendment in the nature of a substitute to H.R. 1316, an 

amendment that seeks to restore some of the balance that was lost 

when BCRA was enacted. This amendment removes some of the 

regulatory situations that hinder the ability of party committees, 

PACs and individuals, to compete on a level playing field with the 

527s. 

Furthermore, it is an amendment that recognizes the crucial role 

of our political parties and what role they play as mediating instiVerDate Aug 04 2004 03:06 Jul 20, 2005 Jkt 022244 PO 00000 Frm 00003 Fmt 6633 Sfmt 6633 E:\HR\OC\A244.XXX A244
2 

tutions within our political system. It understands that the health 

of our democracy is inseparably linked to the health of our political 

parties. 

The amendment that I am introducing retains all of the provisions from H.R. 1316, as introduced, which is a bipartisan bill coauthored by Congressman Mike Pence and Congressman Albert 

Wynn, both of whom testified before this committee about their bill 

last month. At that hearing, Congressman Pence described the purpose of his bill, stating that instead of pushing down the 527s, as 

some have proposed, our bill aims to lift up the other players by 

injecting more freedom into the campaign system. 

And Congressman Wynn explained that the bill would allow national political parties to more effectively raise hard money campaign contributions for their candidates and to promote their parties’ agenda. 

The Pence-Wynn bill makes the following changes to the current 

campaign finance system: First, it lifts the aggregate election cycle 

contribution limit. This change will not only end the unproductive 

competition against political party committees and PACs for donors’ dollars, but it will encourage more giving to the entities, subject to disclosed requirements and contribution limits. 

Next, the bill removes the limit on expenditures coordinated between party committees and candidates. The current limit is based 

on the untenable notion that candidates are in danger of being corrupted by their own political parties. Eliminating this limit removes an unfortunate wedge that has been driven between parties 

and their own candidates. 

One of BCRA’s numerous adverse effects was federalizing many 

activities traditionally carried out at the state and local level. The 

so-called reformers often bemoan the fact that many voters are estranged from the political process, but then impose laws that hamstring the very groups whose mission it is to bring them in. The 

Pence-Wynn bill aims to correct this by allowing state and local 

parties to use funds permitted under relevant state law to engage 

in voter registration activities and to present and distribute sample 

ballots, which I think is a fine provision in this bill. 

The bill also lifts restrictions that prevent many tax-exempt organizations from engaging in electioneering communications on 

equal terms with 527 groups and eliminates the prior approval requirement for trade associations. 

In addition to these provisions, the amendment that I am introducing today includes language that furthers the underlying objectives of H.R. 1316. The amendment raises the contribution limits 

for PACs and indexes them for inflation. The current PAC limits 

have been eroded by 30 years of inflation, and so a modest increase 

has been long overdue. 

The amendment also helps cash-strapped state parties by extending the limits on contributions to state party committees. 

The amendment will furthermore permit unlimited transfers between leadership PACs and national party committees. This provision remedies an unnecessary disparity in the law that allows the 

candidate’s authorized campaign committee to make unlimited 

transfers to a national party committee, but prevents a candidate’s 

leadership PAC from doing the same thing. 

3 

The amendment protects small political organizations from burdensome FEC regulations by raising the committee registration 

thresholds to $10,000. 

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. The amendment we are considering today dismantles some of the barriers by 

allowing Federal officeholders to simply endorse state and local 

candidates without such endorsements being considered coordinated contributions that must be paid for with federal hard dollars. 

Federal candidates will also be able to declare their positions on 

state ballot initiatives and endorse other federal candidates. This 

amendment also clarifies the original intent of a BCRA provision 

that permits federal officeholders and candidates to speak at and 

fully participate in fund-raisers for state and local parties. This is 

one provision, as I have talked to Democrats and, Republicans, I 

think we can agree upon, that it is ridiculous that a federal officeholder cannot endorse a candidate, but a state senator or a state 

rep or anybody else can in the states. 

The amendment strengthens the foreign money ban by prohibiting foreign nationals from making contributions or expenditures 

to 527 organizations. Neither the Federal Election Campaign Act 

nor the Internal Revenue Code specifically bars foreign nationals 

from making contributions to 527 groups. If you looked on the web 

sites last year, you would see where foreign nationals can do that. 

In fact, there were solicitations for foreign nationals. 

So foreign money, despite what BCRA said, came into the system. This amendment corrects that omission. 

The amendment also promotes disclosure of the activities of 527 

groups by requiring that such entities report according to the same 

schedule and under the same terms and conditions as federal political committees. And I think this is a very fair provision. 

Finally, the amendment protects the ability of our citizens to participate in the national political dialogue using Internet Web sites 

and blogs without the fear of being subject to burdensome regulation under the federal campaign finance laws. 

The internet has been a revolutionary tool for engaging our citizenry in the democratic process. Its expanding use should be fostered and encouraged, not hindered by heavy-handed regulatory restrictions. The internet provision contained in this amendment enjoys wide bipartisan support. It is identical to language introduced 

by Senate Democrat leader, Harry Reid and Representative 

Hensarling. 

I believe the amendment that I am introducing today will significantly improve our nation’s campaign finance system by making it 

fair and more balanced, and I ask my colleagues here on the committee to support it. 

I again want to thank the sponsors of the bill, H.R. 1316, Congressman Pence who is here today, and also Congressman Wynn, 

who is not here in the committee today; but I appreciate their bipartisan effort, a truly bipartisan effort for a good, solid bill and 

their efforts on this matter. I believe they are both men of deep integrity and keen understanding about how our campaign finance 

4 

system operates. It has been a pleasure working with them on this 

legislation. 

I also express my gratitude to my colleagues on the committee 

for their hard work and useful suggestions for improving this legislation. Mr. Mica was the author of the 527 disclosure provision. I 

greatly appreciate his efforts to shed more sunlight on the activities of 527 groups. 

Ms. Miller was the driving force behind strengthening the ban on 

foreign contributions to 527 groups and she, along with Mr. Ehlers 

and Mr. Reynolds, also offered very useful provisions for enhancing 

the amendment’s endorsement provision. 

Mr. Doolittle has also been very helpful throughout this entire 

process. 

In addition, I again want to thank Congressman Hensarling for 

his efforts to keep political activities on the internet free and open. 

The formulation of this amendment has been a collaborative effort and the final product has been greatly enhanced as a result of 

the individuals that I have just mentioned. 

And with that, I will yield to Mr. Brady. 

Mr. BRADY. Yes, thank you, Mr. Chairman. And again, thank you 

for your amendments. 

I really would like to thank Mr. Pence and Mr. Wynn for the job 

that they are trying to do to try to make the bill a little bit better. 

Unfortunately, I cannot vote for it simply because of other components that are in this. But I do want to again thank you for putting 

an amendment up that I happen to wholeheartedly agree with, especially where it says, where we state parties can’t issue a sample 

ballot without both parties being on it. I think that that hinders 

the political system. It is a good system of different parties against 

each other, and they should be able to air their views. 

Also, without question, I don’t agree with Federal officeholders 

not being able to endorse a local candidate. I am also a party chairman in the city of Philadelphia and I do, and I will, endorse local 

candidates. I don’t know what position that puts me in. I understand somebody has said it may be criminal and they may incarcerate me. But I would really be embarrassed to go to jail with 

murders and rapists and be there for endorsing a local candidate. 

I would probably have to beat up a guard on the way there just 

to make myself legitimate. 

So you happen to know how I feel about that. 

Ms. LOFGREN. Would the gentleman yield? 

Mr. BRADY. Yes. 

Ms. LOFGREN. On that point, and I have just been consulting, it 

is not illegal for a Federal officeholder to endorse a candidate for 

local office. Raising money is a different issue, but you can endorse 

whoever you want to. And you do and I do and probably all of us 

do. So I think we ought to clarify that. 

There is nothing that constrains any of us from doing an endorsement of a candidate. It is when we get into raising money 

that we get into the problem. 

And I thank the gentleman for yielding. 

Mr. BRADY. Well, just reclaiming my time. In the city of Philadelphia when you endorse a local candidate, they expect you to contribute to their party. So I am at a big catch 22 here. 

5 

But I do appreciate you trying to make it better for me, Mr. 

Chairman. I thank you, and I thank you for your time. 

The CHAIRMAN. I want to thank the gentleman for his comments. 

Before we move on to Mr. Ehlers, let me clarify the point. 

The gentlelady is right about the clarification—it is illegal in the 

sense that 120 days before the primary, 120 days before the general election, if a candidate walks up to you, a State senator, and 

says, ‘‘Can you endorse me?’’ and you say, ‘‘Sure, use a quote, you 

are a good person,’’ once that quote is used, you have to divvy into 

where that quote is used in a brochure or a TV ad. I think a lot 

of Members have not realized that they have accidentally violated 

this law. 

In some cases, and this has come from Democrats and Republicans, they went to the candidate and said, ‘‘I can’t do it unless 

I pay a certain amount of your brochure,’’ which is going to cause 

a major problem. How do you divide it up? Then the candidate 

says, ‘‘Well, my state senator endorsed me; but you know, you are 

a high and mighty Member of Congress, you can’t endorse me. 

I think the gentlelady is right for clarification purposes, but if 

you endorse a candidate 120 days before the election—and I know 

when I have said this before, people say, ‘‘You have got to be kidding,’’ and they are thinking back, ‘‘Wow, I gave quotes to people.’’ 

So I think they are in a potentially illegal situation if they don’t 

contribute after they endorse. 

Mr. Ehlers. 

Mr. EHLERS. I simply want to thank the chairman for his work 

on this bill and his openness to suggestions from members of the 

committee. 

I think BCRA has a number of problems which should be corrected, but also the emergence of the 527s, in my mind, totally destroys the political system that we tried to put in place with BCRA, 

and that is complete and total accountability and openness. And at 

the very least, we have to make certain that all 527s report financial contributions received and disbursements made precisely the 

same way that political parties, political candidates, political PACs 

have to report. 

It is unreasonable to us to have these stringent requirements on 

ourselves, on our PACs, upon the parties and then have it wide 

open for 527s to receive and disburse any funds they want. The 

only thing necessary are reports to the IRS which do not meet the 

standards of the FEC. 

And so it is very important to me that all 527s have to be—if 

they are going to engage in receiving and disbursing political contributions, have to meet the same requirements that any other political committee meets and report to the FEC in precisely the 

same manner. And I am pleased to see that that is now going to 

be incorporated in the chairman’s mark. 

I yield back the balance of my time. 

The CHAIRMAN. The gentlelady from California. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

First, I have thanks for continuing this hearing while our ranking member was recovering from surgery. But also, an objection 

that I did not see the manager’s or chairman’s substitute until just 

6 

today, and I think it could have been a better process had that 

been shared earlier. 

On the merits of the measure itself, there are a few small things, 

for example, not regulating the Internet that hopefully we are all 

going to agree that we should not regulate the Internet. 

I think certainly one can have a discussion and I probably would 

come down with all of us about endorsements being publicized. 

That could be fixed. But you can put lipstick on a pig, and it is still 

going to oink. And I think that is what this bill is. It is still an 

oinker. 

The courts have said that you must tread very lightly, or ‘‘carefully’’ would be a better word, when regulating free speech. And 

this is what we are talking about, political speech, first amendment 

rights; and really, basically the courts have come down, you can 

regulate fund-raising when the purpose is to avoid corruption. And 

that is why campaign finance reform has basically been upheld because the courts have noted that when officeholders solicit funds, 

there is an opportunity for corruption to enter the system and 

therefore a justification and a reason to regulate the raising of 

funds by officeholders and candidates. 

And that reminds me really that this week there has been a lot 

of talk because the identity of Deep Throat was finally revealed 

after so many years. Thirty-two years ago, really, just about this 

time, Senator Irvin was beginning his historic hearings. 

And I have been thinking a lot about those times because I was, 

at that time, a young staffer for Congressman Don Edwards, who 

was a member of the Judiciary Committee and involved in the impeachment of President Nixon; and it was one of the most trying 

experiences of my professional career. 

It was a constitutional crisis. And really, in a lot of ways, that 

came down to money. 

I will never forget being in the, then the majority side of the 

committee rooms as a young person and coming across a fellow who 

actually was a good person. He had been a fund-raiser for the 

President, had a distinguished career as a lawyer, and he was just 

crushed because he had been caught up. And he was a good person, 

but he had been caught up in this wave of money and corruption, 

and his career was ruined; and he knew it. And I think the only 

good thing that really came out of Watergate, one of the good 

things, was campaign finance reform. 

Basically, the bill before us would bring us back to the bad old 

days of the kind of money and fund-raising that was the signature 

of the pre-Watergate days. And I will just go quickly. I know the 

ranking member is here; I started before she came in. 

The kind of money that was compiled under the existing rules, 

under campaign finance reform, the DNC last election cycle raised 

$311,524,000, the RNC, 392,413,000, a lot of money. Certainly we 

don’t need more than that. The DCCC, 92.8 million; the NRCC, 

185.7 million; the Democratic Senatorial Campaign Committee, 

88.6 million; and the Republican Senate committee, 78.9 million. 

This bill before us would change the current limit of $101,400 

per election cycle. That would actually eliminate that limit, and I 

think the ranking member is prepared to say how high it would go. 

7 

This bill is bad for two reasons. It brings back campaign finance 

reform to the Watergate era and will increase corruption, and it 

impermissibly attempts to regulate free speech in the 527 arena. 

We don’t have the justification to avoid corruption of officeholders 

there because it is prohibited for Federal officeholders to solicit 

money for 527s, and if that is happening, it ought to be referred 

to the Justice Department because it is illegal. 

And so the rationale for limiting free speech is surely not 

present. If we pass it, it will be struck down, I am sure. I think 

groups on both sides of the political spectrum from the NRA to 

Planned Parenthood will go after it; and they should, because they 

have a right to speak their mind so long as they are not entangled 

with a corruption of the political system. 

So I believe my time has probably expired. The ranking member 

is here. I think we are engaged in an effort here that we will regret 

deeply, and I yield back. 

The CHAIRMAN. I want to welcome the ranking member back. 

And so we are pleased to have you here today, and if you 

would—— 

Ms. MILLENDER-MCDONALD. Thank you so much, Mr. Chairman. 

And before I make my statement, let me clearly thank you for your 

sensitivity, your kindness, and your persistence in ensuring that 

this markup did not take place until I had come back from recovery. So I thank you gentlemen for your greatness and for your expression of floral arrangements to me. And so, thank you so much 

for the great chairman you are. 

Mr. Chairman, again I would like to thank you for your efforts 

in the area of election reform. With the limited amount of time that 

we have between now and the next election, we should be listening 

to and solving the problems of voters, the citizens who were 

disenfranchised or experienced voting and registration problems in 

2004. 

And we know exactly the many folks who were disenfranchised. 

We were in Ohio. We know that over 100,000 provisional ballots 

were not counted; and this is really just the beginning of many, 

many States where ballots were not counted. 

So not facilitating political access for those whose voices have not 

been heard, but making sure that access by wealthy contributors 

whose perceived notions as gaining unlimited influence is really 

unconscionable. This is why we brought about BCRA. BCRA was 

intended to give ordinary citizens a greater say in the political 

process by eliminating the influence of six to seven figure donations 

to Federal campaigns. 

The first amendment rights and getting more Americans involved in the political process is what we should be all about; not 

to muffle those whose voices have not been heard, but to give them 

better access to this whole notion of the political process. 

We have seen that there have been record numbers of voter registration—young people by greater margins—and this all came 

about because of those independent organizations going out doing 

their due diligence for those folks whose voices were not heard. Yet, 

this legislation that is before us today is being pushed by the opponents of BCRA in an effort to repeal aspects of the very campaign 

8 

finance laws which were enacted in 1974 to address the Watergate 

scandal. 

I hope we can continue to work together on electoral issues. 

Mr. Chairman, you have been willing—as you demonstrated this 

past March, to hold a hearing in Ohio, which was at the center of 

the 2004 election debacle, you have been willing to step up front 

to talk about those issues of disenfranchisement. You have not 

been afraid to examine the sticky issues occasioned by voter disenfranchisement, and you have been willing to take this across the 

country. 

Well, it is time for us to do this, Mr. Chairman. With the time 

that we have left in this session, I hope that we continue to conduct 

additional field hearings throughout the country to protect HAVA 

and promote our robust democracy. We should be discussing how 

to get those 40 percent of Americans who did not vote in the last 

election to the election box to exercise their franchise, not working 

to find more ways to get more money from wealthy contributors. 

As I stated before, I voted for BCRA to sever the connection between Federal officeholders and the raising of soft money. BCRA 

was necessary to cut the perceived link between officeholders, the 

formation and adoption of Federal policy, and non-Federal money. 

I feel that passage of this bill will be a huge step backwards towards the six figures of hard dollar checks by soliciting again by 

Federal officeholders. 

I will give you reasons why I will not be supporting this bill. The 

proponents of this legislation were among the strongest opponents 

of BCRA and are using public concerns over so-called 527s, as a 

pretext for rolling back and rolling back BCRA. The debate over 

Pence-Wynn should be focused on BCRA and whether the current 

aggregate donor and expenditure limits should be maintained. 

Secondly, claims that Pence-Wynn needed to put the parties back 

in charge are untrue. BCRA did not kill the parties. After the passage of BCRA, the parties raised a record 1.2 billion, as in ‘‘B’’, dollars, in hard dollars this last election cycle. This is $200 million 

more in hard dollars than the combination of hard and soft money 

raised in the past pre-BCRA cycle. 

The parties do not need the Pence-Wynn bill to get back into the 

game. They are already in this game. BCRA became law just over 

3 years ago. It was passed by a Republican Congress and signed 

by a Republican President, yet it has only been given one election 

cycle to work. Just as you have said about HAVA, Mr. Chairman, 

we should not amend a law that has not been given time to become 

fully functional. 

The Pence-Wynn not only amends, but undermines a law that is 

working. By removing the caps on coordinated expenditures, PenceWynn would allow a national party committee to completely underwrite a multimillion-dollar campaign against any candidate that it 

targets, since it eliminates the limits on party-coordinated expenditures in the general election. This would provide the political party 

in power with a great advantage. 

The national parties should be on equal footage. This legislation 

impedes this. H.R. 1316 is not the vehicle for reform. 

This legislation would weaken BCRA by stripping away the aggregate limits on what an individual could give to the parties and 

9 

candidates. Currently, an individual can give up to $101,400 to all 

political parties, PAC committees and candidates in a 2-year Federal election cycle; this amounts to an individual giving up to 

40,000 to Federal candidates and 61,400 to political parties and 

PAC committees. This is what we want. 

But if the Pence-Wynn bill becomes law, an individual could give 

$160,200 to the three multinational—to the three national committees of a political party, or $1 million to the State party committees 

of that party, 20,000 to each for the 50 State party committees and 

1.8 million to each of the 435 Members’ races for a particular party, 

for a total of almost $3 million. This will peel away the FECA aggregate limits, which were put in place as a direct result of the 

scandals of Watergate. 

With the passage of BCRA, a loophole was closed that allowed 

corporations and unions to donate soft monies to Federal candidates. As a result of BCRA, the parties raised a record 1.2 billion 

again in hard dollars. By encouraging grass-roots organizing and 

the use of the Internet, BCRA helped to transform political fundraising and attracted millions of new, smaller donors, making the 

entire fund-raising process more democratic. By doing so, it gave 

greater prominence to average Americans in the political process. 

The Pence-Wynn bill stands to reverse those gains by returning 

to an increasing reliance by the party on wealthy donors. It would 

increase the role of special interests in campaigns, most notably 

trade associations, by allowing trade associations to make unlimited electioneering communications. 

It has not been demonstrated that the money raised and expended by 527 organizations has the same potential corrosive influence on Federal policymakers. 527s, in fact, helped increase voter 

turnout to the highest levels since 1968. I can attest to that, because my area of Watts and Compton in Los Angeles, and other minority groups and areas around this country, there was a vast 

amount of energy that was given to those who had thought that 

their voices were not heard. 

I say to you, Mr. Chairman, I want that to remain. Minorities, 

women and others, want to at last have a speaking role in this political process. Bills like this do nothing to make that happen. 

So on behalf of the minority on this side in this committee and 

all the minorities throughout this country, I hereby give notice that 

the minority intends to file additional and minority views to the 

committee report. I will also be encouraging my colleagues who oppose this unnecessary and damaging piece of legislation. 

Thank you, Mr. Chairman, for the time. 

The CHAIRMAN. I thank the gentlelady. 

Gentleman from Florida. 

Mr. MICA. Well, thank you, Mr. Chairman. And it is good to see 

the ranking member back. She appears to be in excellent health 

and just as feisty as ever. 

But I would have to disagree with her and strongly support the 

chairman’s mark. I think it is a vast improvement. And first of all, 

I want to thank you, Mr. Chairman, for including my amendment. 

You referred to it as an amendment that would shed light on the 

political process and what 527s are doing to participate. 

10 

Not coordinating our statements to that, I call it a ‘‘sunshine 

amendment’’ which requires the 527 groups to submit reports to 

the FEC in the same manner applicable to Federal political committees. 

I have no problem with 527s, but 527s, when they participate in 

political advocacy—and we have seen that dramatically in the last 

election—are basically an attempt to skirt the intent of our campaign finance laws. So if we are sort of stuck with them, and stuck 

with them in the process, the very least we can do—and I think 

this will be the best amendment in this bill, and I am not taking 

credit for authorship because others have also proposed the same 

thing—but it forces the 527s to abide by the same disclosure rules 

as every other political group, forces the 527s to give detailed and 

itemized reports to the Federal Elections Commission, and it also 

requires all contributions and expenditures to be public information 

accessible. 

So if we can’t control their political activities—and I have no 

problem with them being part of the process and increasing voter 

participation, but when they are trying to influence an election, 

and we know they are actually doing that, the very least we can 

do is shed light on who gave what and how much, and have full 

public disclosure. 

So again, Mr. Chairman, I thank you for including this provision, 

and yield back. 

The CHAIRMAN. Thank you. 

Gentleman from New York. 

Mr. REYNOLDS. Thank you, Mr. Chairman. I came in having 

some understanding of both the bill and the chairman’s mark and 

by listening to some of the opening comments, and I was not going 

to make any. 

But first of all, the best way to have an understanding of individuals as candidates for Federal officials would be to have prompt 

and accurate reporting, I think similar to the Doolittle provision 

that was offered. And what I see here, as a guy who has been both 

elected and a former party chairman, is the law of the land is now 

BCRA. But in listening to the gentlewoman from California discussing that first amendment—if anything, I certainly, in listening 

to our lawyer’s anticipation of what the courts might do, found a 

shock in the fact that BCRA actually limited first amendment 

rights in the final decisions by the court on the law of the land prohibiting certain actions by individuals under the law. But nevertheless, as I have said on this committee before, BCRA is the law of 

the land. 

Now, I haven’t heard any one of our colleagues, other than 

maybe the author, say this is a perfect bill. And in hammering together, section by section, the BCRA law, it was designed in those 

efforts to get 218 votes; and it did. And it passed in both bodies, 

it was signed by the President, it was affirmed by the courts. 

However, the discussion, as we move forward on 527s and the 

fact that anyone can say it is a level playing field or that this is 

some great way of limiting temptation by elected officials or candidates from having too much money in the thing, when I look at 

the fact of how much 527s have invested, along with (c)(4)s and 

others, on circumventing the BCRA law because 527s apparently 

11 

were silent in the law, although some authors have indicated that 

it was their intent to have it, or certainly now they are going to 

address this somehow, there is more money that is outside of regulation of the FEC of either us as candidates or our parties, and 

those parties on both sides, whether they be senatorial, congressional or the national parties. 

And we now find that while we govern ourselves in the party by 

felonies—we have civil and IRS and late filings—and it will be in 

the next cycle, after 2006, that we will even know what types of 

things might have been committed incorrectly by 527s this cycle. 

So it is clear, in my view, that we need to address a level playing 

field of 527s and (c)(4)s and those who want to enter and fully engage in the political process. And there may be two thoughts, 

whether it is Pence-Wynn on looking at leveling the playing field 

of 527s in our national parties; or it may be that Shays-Meehan 

and our House have just let us go after 527s. Then the question 

will be, when 527s kind of dissolve and they move to (c)(4)s, are 

we going to keep going down the line till we find ourselves trying 

to chase each and every loophole that is in the law other than for 

Federal candidates and parties. 

And I still come from an aspect—and I hope there are some on 

both sides of the aisle—that party structure does matter and that 

party structure on a level playing field will hold its own. But today, 

527s and their donors—and before this is done, I will have the information of the top four donors that are in the 527s. 

And you talk about money into the plates. This is unregulated 

investment that is coming into the arena by both sides, but it is 

under no auspices of BCRA today. 

And so this committee starts the challenge of whether we are 

going to have a level playing field or whether we are going to find 

ourselves where we are going to turn our heads and allow an unregulated enterprise to come in and tilt both candidates, elect the 

officials and the party structure as we know it. 

Yield back. 

The CHAIRMAN. Gentleman from California. 

Mr. DOOLITTLE. Mr. Chairman, I missed the, all the opening 

statements, so Mr. Reynolds, I think—— 

Mr. MICA. You are fortunate. 

Ms. MILLENDER-MCDONALD. He is unfortunate. 

Mr. DOOLITTLE [continued]. Makes a very valid point. 

Theodore Roosevelt and the Progressives started us off on this 

terrible road that we are far down our way on. And the best thing 

that you could do would be to undo all of that and be completely 

unregulated, have full disclosure. Let candidates run their campaigns. Let free speech prevail. Don’t create perverse incentives 

where the candidate, because of fund-raising increase restrictions 

increasingly, over time the speech moves away from the candidate 

where you have either independent-type expenditures, or 527s or 

whatever, that are increasingly spending money to influence the 

campaign. 

These ardent proponents of more and more regulation will not 

hear anything that contradicts what their, I am going to call it, ‘‘religion’’ is. Facts don’t matter. They have pure faith, misguided 

12 

faith, not in God, but in regulation. And the more regulation we 

have, the less accountable the campaigns become. 

I just think it is tragic. We have lost a good deal of our free 

speech as a result of that Supreme Court opinion upholding 

McCain-Feingold, Shays-Meehan. You are never going to take the 

money out of politics. You have hobbled candidates and, increasingly, you are allowing third-party groups to get involved here. You 

create an incentive for them to get involved. 

This bill, the Pence-Wynn bill, makes some needed reforms to 

create—to level the playing field so that at least political parties 

are competing equally with 527s. I don’t know how these proponents of big government regulation could tell us that, you know, 

the Pence-Wynn bill is going to take us back to pre-BCRA or preWatergate reforms. I wish it would take us back to those days. We 

would be a lot better off. 

Instead, we are where we are. And last year, five millionaires in 

California contributed $78 million to anti-Bush 527s. How anyone 

can sit here and claim that with those facts that somehow, you 

know, the money is out of politics, that is just absurd on its face. 

I don’t mind money. It is a neutral tool. It just that both sides 

ought to be able to have equal access to it. And as long as it is reported, I don’t see any problem with that. This is a free republic 

and, you know, that is how we win our elections. 

I do think that the system is skewed and I think that we ought 

to pass the Pence-Wynn bill in order to improve the situation. 

And I thank you, Mr. Chairman, for this opportunity. 

The CHAIRMAN. I thank the gentleman. 

I think the gentleman from New York wants to enter something 

for the record and probably say the first four I assume. 

Mr. REYNOLDS. I thank the chairman, because I didn’t have these 

in front of me. The top four Democratic donors to 527s, as published on the PoliticalMoneyLine, which is certainly an accepted 

use of reporters in finding this information and sharing it: Soros, 

$27 million; Lewis, 24 million; Marion Sandler, 14 million; Stephen 

Bing, 14 million. 

And even when we look at the Republicans, some were noted 

that the Swift Boat, while they are not as generous or able to share 

their dollars in the arena: Perry, 8 million; Boone Pickens, 6 million; Arnall, 5 million; Alex Faye Spanos, 5 million—those eight individuals almost like 80 percent of the types of investment that 

have come in here in the name of free speech in an unregulated 

aspect of what we now have in the Federal election law. 

And I am happy to make available from the PoliticalMoneyLine 

the money and political databases of the large 527 donors for the 

election cycle, 2004. And for anyone to believe that this has not got 

big, unregulated money in a terrible policing aspect of the law of 

the land, we are kidding ourselves. 

I thank the chairman. 

The CHAIRMAN. Without objection, that will be entered as part of 

the record. 

[The information follows:] 

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The CHAIRMAN. Gentlelady from Michigan. 

Mrs. MILLER. Thank you, Mr. Chairman. I have just a brief 

statement here. I certainly want to thank you for having this 

markup today, and I will be supporting the Chairman’s mark. I 

think it is certainly a step in the right direction toward bringing 

more accountability and disclosure into our election process. 

The 2004 election was the first one that we had conducted under 

the provisions of BCRA, and we all learned a lot of important lessons. We found that it is nearly impossible, despite the most onerous of regulatory burdens, to take big money out of the political 

process. When the parties were taken out of the soft money business by BCRA, the soft money did not go away, as some of the reformers had hoped. It just found a new home. 

The big contributions that used to go to the national political 

parties instead went to these very loosely affiliated groups, as we 

all call them, the 527 organizations. These organizations, as has 

been articulated here already, numerically have spent over $500 

million with less disclosure than before and with less accountability 

to the American people. These groups did not have to file with the 

Federal Election Commission, and are not directly associated with 

political parties. Because of this, there was significant voter confusion, I think, as to who was actually trying to influence the voters 

of America. 

While the BCRA cosponsors had commendable intentions, their 

legislation resulted in nearly unintelligible regulations which 

caused confusion even amongst veteran campaign finance attorneys. 

As mentioned here, I have also had a personal experience where 

I had three different campaign finance attorneys give me three different opinions about an endorsement I wished to give to a county 

prosecutor candidate. 

The reality of the situation created by BCRA also forced at least 

one of the political parties to outsource its entire voter mobilization 

and turn over efforts to 527 organizations. In fact, this has prompted one of these 527 groups to contend—in a fund-raising appeal 

that they sent, ‘‘It is our party, we bought it, we own it and we 

are taking it back.’’ I don’t think that those types of words make 

it seem like the big money has been taken out of politics. 

From the hearings that this committee has held and the evidence 

from the last election, it has been plain for all of us to see that 

BCRA was a very poor piece of legislation that resulted in tremendous unforeseen consequences; and that is certainly one of the reasons I am going to be supporting the chairman’s mark. This legislation, I think, will bring a deregulatory approach to the campaign 

finance arena for the first time in actually 30 years. 

And as I have stated in other hearings that we have had on this 

topic, no matter how many laws Congress passes or how many regulations the FEC hands down to limit the influence of money and 

politics, money will always find its way back into the process. In 

fact, I have often said that I think money is sort of like the tide. 

It seeks its own level in politics. Or perhaps it is sort of like holding a handful of jelly. Just about the time you think you have it, 

it is leaking out of this finger, and this finger or the next finger. 

20 

I think if money is going to come into the process, it should certainly do so under the greatest amount of sunshine and greatest 

amount of accountability. 

Again, I think this bill is a very good first step in that direction. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Well, thank you. 

Gentlelady from California. 

Ms. MILLENDER-MCDONALD. Yes, I would really like to make 

some comments on some of the statements that have been made. 

Certainly, with the Supreme Court upholding BCRA, Mr. Reynolds, that seems to suggest to me that there were no limits on 

first amendment rights if they upheld this, which they did. 

And secondarily, when Mr. Mica suggests that 527s control the 

activities of the day, what do you think huge amounts of hard dollars will do in controlling a message? 

And that is exactly what will happen with this bill, the PenceWynn bill, because it will have just a huge amount of funds coming 

in, hard dollars from wealthy donors. And you cannot say, as in the 

past, that it does not control the message. 

Lastly, this bill does take away the reforms that were created in 

1974; thus was the reason why we have the Federal Election Campaign Act, so that it will limit the amount of dollars that go into 

campaigns. The American people are sick and tired of the money 

that is put into campaigns for—to move and to try to influence 

elections, and this is exactly what will happen. 

This bill is not, will not level the playing field. In fact, it will 

make it lopsided, if you will. So this bill that we have before us 

does not do anything to help us as we try to grapple with taking 

a lot of money out of the hands of policyholders, and it certainly 

does muffle the voices of those who have had no voice. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank the gentlelady. The Chair lays before the 

committee the bill, H.R. 1316, open to amendment, and the Chair 

offers an amendment in the nature of a substitute. 

Is there any discussion on the amendments that we have discussed previously? The Clerk will report the amendment. 

The CLERK. Chairman’s mark amendment to H.R. 1316 offered 

by Mr. Ney, ‘‘Strike all after the enacting clause and insert the following— 

[The information follows:] 

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The CHAIRMAN. Without objection, the amendment is read. Is 

there any discussion on the amendment? 

Ms. LOFGREN. Mr. Chairman. 

The CHAIRMAN. The gentlelady from California. 

Ms. LOFGREN. First, I would like to ask unanimous consent to 

put in the record an article from the National Journal: The Weekly 

on Politics and Government from May 7 entitled ‘‘Here’s a New 

Campaign Finance Report Reform Plan: Just Stop.’’ 

The CHAIRMAN. Without objection. 

Ms. LOFGREN. Secondarily, I made my primary comment at the 

outset, but I just think that it is worth reiterating that the direction that the chairman and apparently the majority are going in is 

wrong in both directions. 

The whole premise of campaign finance reform, when it comes to 

candidates, is that if you go out and solicit large amounts of money, 

there is the possibility of corruption, that the people who give you 

money will get bills and favors in return. And this is why the court 

has upheld the regulation of the solicitation of funds by candidates 

to avoid the corruption of the political system. 

And it is not a hypothetical. We have seen corruption in our political system. There is a reason to prevent that. So the bill actually 

loosens up the control of corruption that was the cause of the regulation of the solicitation of funds by candidates and parties on their 

behalf. 

At the same time you, 527s or other groups that are not candidates for office, that have no ability to provide a benefit to donors 

by way of law or political favor would be regulated under the bill— 

unconstitutionally, I believe—and I just think that this is wrong. 

Not just once, this bill is wrong twice, taking us in the wrong direction in both cases. It is a terrible mistake. 

And I thank the gentleman for recognizing me. 

The CHAIRMAN. I would disagree respectfully with the gentlewoman on the point that this is more hard dollars, exposed hard 

dollars to the public that would come from Democrats and Republicans. Again, the 527 organizations have a lot of unaccountable 

money. 

But I would agree with one thing while welcoming what the 

gentlelady is saying when she speaks about the direction of the 

chairman and the majority party, if by that fact you mean Mr. 

Wynn has joined the Republican Party. 

We would love to have him. He is, I think, a wonderful member 

of Congress. He happens to be on the bill also. 

Ms. LOFGREN. Would the gentleman yield because obviously we 

have great affection for Mr. Wynn. We just think he erred in this 

particular case. 

The CHAIRMAN. Well, to err is human. And with that, any 

other—— 

Mr. DOOLITTLE. Well, Mr. Chairman, I just respectfully disagree 

with my colleague from California. 

It is correct the Supreme Court, in its absurd ruling in 1976 upholding the limits on contributions, used the pretense of preventing 

corruption, or appearance of corruption, as a justification for 

abridging the first amendment rights through governmental regulation. 

38 

But there was never any evidence in the record of corruption or 

appearance of corruption. They just assumed that to be true. And 

this is constantly asserted by proponents of campaign finance regulation, but they never offer any evidence. 

But it is just—it is so believable to say ‘‘corruption’’ and ‘‘politicians are corrupt.’’ but there is never any cause and effect that is 

ever demonstrated. And I just want to get that into the record, because I am not going to sit here and accept as the gospel that, you 

know, because of a demonstrated record of corruption we got that 

absurd set of amendments in 1974 that made the situation even 

worse after Theodore Roosevelt & Company got involved, and now 

we have made it even worse than that after McCain-Feingold, 

Shays-Meehan got involved. 

The CHAIRMAN. Any other comments? 

The question is on the amendment. Those in favor of the amendment will say aye. 

Those opposed will say nay. 

Ms. MILLENDER-MCDONALD. Mr. Chairman, I ask for the yeas 

and nays. 

The CHAIRMAN. The ayes have it and the gentlelady asks for the 

yeas and nays. The clerk will call the roll. 

The CLERK. Mr. Ehlers. 

Mr. EHLERS. Aye. 

The CLERK. Mr. Mica. 

Mr. MICA. Aye. 

The CLERK. Mr. Doolittle. 

Mr. DOOLITTLE. Aye. 

The CLERK. Mr. Reynolds. 

Mr. REYNOLDS. Aye. 

The CLERK. Mrs. Miller. 

Mrs. MILLER. Aye. 

The CLERK. Ms. Millender-McDonald. 

Ms. MILLENDER-MCDONALD. No. 

The CLERK. Mr. Brady. 

Mr. BRADY. No. 

The CLERK. Ms. Lofgren. 

Ms. LOFGREN. No. 

The CLERK. Chairman Ney. 

The CHAIRMAN. Yes. 

The CHAIRMAN. Six to three. The amendment is agreed to. 

The question is now on the substitute as amended. Those in 

favor will say aye. 

Those opposed will say nay. 

Ms. MILLENDER-MCDONALD. Mr. Chairman I would ask for a recorded vote. 

The CHAIRMAN. And with that the ayes have it. 

And the gentlelady asks for a recorded vote. The clerk will call 

the roll. 

The CLERK. Mr. Ehlers. 

Mr. EHLERS. Aye. 

The CLERK. Mr. Mica. 

Mr. MICA. Aye. 

The CLERK. Mr. Doolittle. 

Mr. DOOLITTLE. Aye. 

39 

The CLERK. Mr. Reynolds. 

Mr. REYNOLDS. Aye. 

The CLERK. Mrs. Miller. 

Mrs. MILLER. Aye. 

The CLERK. Ms. Millender-McDonald. 

Ms. MILLENDER-MCDONALD. No. 

The CLERK. Mr. Brady. 

Mr. BRADY. No. 

The CLERK. Ms. Lofgren. 

Ms. LOFGREN. No. 

The CLERK. Chairman Ney. 

The CHAIRMAN. Aye. 

The CHAIRMAN. Six to three. The bill is adopted as amended. 

And the Chair recognizes Mr. Ehlers for the purpose of offering 

a motion. 

Mr. EHLERS. Mr. Chairman, I move that H.R. 1316, as amended, 

be reported favorably to the House. 

The CHAIRMAN. The question is on the motion. Those in favor 

will say aye. 

Those opposed will say nay. 

Ms. MILLENDER-MCDONALD. I ask for a recorded vote on that, 

Mr. Chairman. 

The CHAIRMAN. The ayes have it. 

And the gentlelady, the minority ranking member, has asked for 

a vote. The clerk will call the roll. 

The CLERK. Mr. Ehlers. 

Mr. EHLERS. Aye. 

The CLERK. Mr. Mica. 

Mr. MICA. Aye. 

The CLERK. Mr. Doolittle. 

Mr. DOOLITTLE. Aye. 

The CLERK. Mr. Reynolds. 

Mr. REYNOLDS. Aye. 

The CLERK. Mrs. Miller. 

Mrs. MILLER. Aye. 

The CLERK. Ms. Millender-McDonald. 

Ms. MILLENDER-MCDONALD. No. 

The CLERK. Mr. Brady. 

Mr. BRADY. No. 

The CLERK. Ms. Lofgren. 

Ms. LOFGREN. No. 

The CLERK. Chairman Ney. 

The CHAIRMAN. Aye. 

The CHAIRMAN. Six to three. The motion is agreed to and H.R. 

1316, as amended, is reported favorably to the House. 

I would also like to add a note. I have had a personal conversation with Mr. Meehan and also with Mr. Shays. I can only speak 

for myself, but I would also welcome a vote on their 527 bill at 

some point in time. I have indicated that to both of the gentlemen. 

I ask unanimous consent that members have seven legislative 

days for statements and materials to be entered into the record. 

Without objection, the material will be so entered. 

I ask—— 

40 

Ms. MILLENDER-MCDONALD. Mr. Chairman, pursuant to clause 

(2)(l) of rule 11, I am requesting not less than 2 additional calendar 

days, as provided by the rules, to submit additional views to accompany the committee’s report on this bill. 

The CHAIRMAN. Without objection, the gentlelady’s request is 

honored. 

I ask unanimous consent that the staff be authorized to make 

technical conforming changes on all matters considered by the 

Committee at today’s meeting. Without objection, so ordered. 

I want to thank all the members for the debate and thank the 

members for their attendance. With that, the Committee is adjourned. 

[Whereupon, at 4:59 p.m., the Committee was adjourned.]