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[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

 
             Markup of H.R. 513, The 527 Reform Act of 2005

=======================================================================

                                 MARKUP

                               BEFORE THE

                   COMMITTEE ON HOUSE ADMINISTRATION

                        HOUSE OF REPRESENATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

              MARKUP HELD IN WASHINGTON, DC June 29, 2005

                               __________

      Printed for the Use of the Committee on House Administration

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                   COMMITTEE ON HOUSE ADMINISTRATION

                        BOB NEY, Ohio, Chairman
VERNON J. EHLERS, Michigan           JUANITA MILLENDER-McDONALD, 
JOHN L. MICA, Florida                    California
CANDICE MILLER, Michigan               Ranking Minority Member
JOHN T. DOOLITTLE, California        ROBERT A. BRADY, Pennsylvania
THOMAS M. REYNOLDS, New York         ZOE LOFGREN, California
                     Paul Vinovich, Staff Director
                George Shevlin, Minority Staff Director

             MARKUP OF H.R. 513, THE 527 REFORM ACT OF 2005

                              ----------                              

                        WEDNESDAY, JUNE 29, 2005

                          House of Representatives,
                         Committee on House Administration,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1:04 p.m., in Room 
1310, Longworth House Office Building, Hon. Robert W. Ney 
(chairman of the committee) presiding.
    Present: Representatives Ney, Ehlers, Doolittle, Reynolds, 
Miller, Millender-McDonald, Brady and Lofgren.
    Staff Present: Matt Petersen, Counsel; Paul Vinovich, Staff 
Director; Chris Otillio, Legislative Director; Jeff Janas, 
Professional Staff Member; George Shevlin, Minority Staff 
Director; Thomas Hicks, Minority Professional Staff; and Matt 
Pinkus, Minority Professional Staff.
    The Chairman. We are going to begin. I will get my 
statement out of the way.
    The Committee is now in order for the purpose of 
consideration of H.R. 513, the 527 Reform Act of 2005.
    The Bipartisan Campaign Reform Act of 2002 was supposed to 
curtail the influence of soft money in the Federal election 
system. However, during this past election, BCRA fell woefully 
short of achieving its primary objective. Over a half billion 
dollars in soft money was spent in an attempt to affect the 
outcome of the 2004 elections. In the process, BCRA distorted 
our political process by taking power away from our political 
parties and redistributing it to less accountable, 
ideologically driven, outside groups and created an unlevel 
playing field. The result is a system where soft money 
continues to thrive, when it was stated many, many times--and 
now I am beating the horse completely to death--that soft money 
will be out of the system.
    Soft money is not out of the system. So the result is a 
system where soft money continues to thrive, our political 
parties, especially those at the state and local level, are 
increasingly unable to carry out core functions such as voter 
registration activities, and the influence of billionaires like 
George Soros is greatly enhanced. Needless to say, this does 
not represent progress.
    Also, to be fair, you can have Republican George Soroses, 
one would hope, from the Republican party, I assume, that would 
come onto the scene.
    The question thus becomes, what is the best way to correct 
the situation?
    Three weeks ago, this Committee reported out H.R. 1316, the 
527 Fairness Act of 2005. That bill is sponsored by Congressman 
Mike Pence and Albert Wynn. Mike Pence is a Republican. Albert 
Wynn, the last I looked, is a Democrat. So this bipartisan bill 
takes a deregulatory approach to the 527 issue.
    As Congressman Pence has said, instead of pushing down the 
527s as some have proposed, H.R. 1316 aims to lift up the other 
players by injecting more freedom into the campaign system. In 
other words, H.R. 1316 seeks to reduce some of the regulatory 
burdens that hinder the ability of party committees, PACs, and 
individuals to compete on a more level playing field with 527s.
    Unlike that bill, H.R. 513, the measure we are considering 
today, takes a regulatory approach to the outbreak of soft 
money spending by 527 groups during the 2004 election cycle. So 
it takes a different approach at what I think has become a 
problem.
    H.R. 513 would require all groups filing under Section 527 
of the Tax Code to register and report with the Federal 
Election Commission as political committees. Thus, 527 groups 
would be subject to the same contribution limits and source 
restrictions that are applicable to federal political action 
committees. A narrow exemption would be provided for 527 groups 
whose annual receipts were less than $25,000 or whose 
activities related exclusively to state or local elections or 
ballot initiatives. However, this exception would not apply if 
a 527 group, one, transmitted a public communication that 
promoted, supported, attacked or opposed a federal candidate in 
the year prior to a federal election; or, two, conducted any 
voter drive activities in connection with the election in which 
a federal candidate appears on the ballot.
    H.R. 513 would also impose new allocation rules on 527 
groups regarding expense for federal and non-federal 
activities. For instance, 100 percent of expenses for public 
communications or voter drive activities that refer only to a 
federal candidate would have to be paid for with hard money. If 
both federal and non-federal candidates were mentioned, then at 
least 50 percent of the expenses would have to be paid for with 
hard money. In addition, under 513, at least 50 percent of a 
527 group's administrative overhead expenses would have to be 
paid for, again, with hard money. Finally, H.R. 513 would 
permit 527 groups to maintain certain qualified non-federal 
accounts to allocate spending with federal accounts.
    I would also note I have a change from Mr. Shays which he 
is supporting, and I will take that up as we go on and explain 
it in a substitute.
    A qualified non-federal account would only be permitted to 
accept contributions from individuals, and such contributions 
would be capped at $25,000 a year. Moreover, national political 
parties and federal candidates would be prohibited from 
soliciting funds for these non-federal accounts.
    Today, at the request of Mr. Shays, I will be offering this 
substitute amendment. The amendment is designed to exempt 
organizations consisting exclusively of state and/or local 
elected officials, for example, the Republican and Democrat 
Governors Associations and the National Conference of State 
Legislators, from the requirements of this bill, provided they 
do not reference federal candidates in their voter drive 
activities.
    Furthermore, the amendment provides an exception for other 
committees that limit their activities to state and local 
elections and issues so long as they restrict their operations 
to one state and make no references or contributions to federal 
candidates.
    The minority members of the committee and their leadership 
have made clear their opposition to the other bill we passed, 
the Pence-Wynn bill, and declared themselves reformers on the 
issue; and I will hope, however, they will join us and support 
this bill.
    This bill has been endorsed by the reform community, Common 
Cause, Democracy 21, the Campaign Legal Center; and other like-
minded groups recently sent a letter urging House Members, 
quote, ``to support H.R. 513, the 527 Reform Act of 2005, 
sponsored by Representatives Christopher Shays and Marty 
Meehan,'' end quote, arguing this bill, quote, ``is necessary 
to close the loophole that allowed Section 527 groups to raise 
and spend hundreds of millions of dollars in unlimited soft 
money contributions for campaign ads and partisan voter 
mobilization efforts to influence the federal elections.''
    The majority on this Committee, I believe would prefer the 
Pence-Wynn bill because our experience with BCRA has taught us 
that the regulation doesn't equal the process. BCRA succeeded 
only in steering large soft money contributions away from the 
parties; H.R. 513 will succeed only in steering them away from 
the 527s. Where they will go next is anyone's guess--to 
501(c)(4)s or wherever on earth the money travels to--but they 
will probably go somewhere else. But even though I prefer the 
other approach, there is nothing wrong with this approach; and 
I said that quite a while ago.
    I am here today because the status quo is unacceptable. 
Either we loosen the regulatory ties binding the political 
parties, the PACs and individuals that prevent them from 
competing on equal terms with 527 groups, or we must subject 
527s to the same regulatory restrictions that are applicable to 
all parties, candidates and committees. Doing nothing is not an 
option.
    So today I propose that the Committee report out the 
substitute amendment I am introducing, thus allowing it to be 
fully debated on the House floor along with the Pence-Wynn 
bill. Since the intention is to report this measure without 
recommendation, voting yes does not indicate you necessarily 
support the substance of the underlying legislation; rather, it 
merely will discharge this bill. But I would note we are not 
reporting this unfavorably, and that is a significant step. 
That gives this bill a fighting chance as it goes to the floor 
of the House.
    I fully support this bill. I am going to vote for this bill 
today. I am going to vote for this bill on the floor of the 
House. I have informed Mr. Shays and Mr. Meehan of that fact.
    I will entertain an opening statement from our Ranking 
Member. Thank you.
    Ms. Millender-McDonald. Thank you so much, Mr. Chairman.
    I don't know whether to thank you for scheduling this 
markup, in that it seems that we are going to have a markup 
each week on this whole BCRA issue, but I would like to thank 
you for again coming together with me to consider H.R. 513, the 
527 Reform Act of 2005. This bill does deserve to be debated in 
the full House along with other bills such as the H.R. 1316, 
the 527 Fairness Act of 2005, marked up by this committee just 
a couple weeks ago.
    527s are named after a section of the Internal Revenue 
Code, as we know, that specifies the tax treatment accorded 
political organizations and tax-exempt organizations which make 
political expenditures.
    Congress has addressed 527s twice in the last 5 years. The 
Federal Election Commission has added to the regulations of 
these groups recently. Like in January of this year, the FEC 
implemented new rules to ensure that organizations that raise 
and spend money expressly to influence Federal elections will 
be required to register and file reports with the commission. 
Additionally, they must pay for activities that influence 
Federal elections with money under the limitations and 
prohibitions of the Bipartisan Campaign Act of 2002, BCRA.
    Under the new regulations, funds received in response to a 
communication that indicates any portion of the funds will be 
used to support or oppose the election of a clearly identified 
Federal candidate will be considered contributions to the 
person making the communication. The consequences of this is 
that an organization's major purpose of which is to make 
contributions and expenditures in Federal elections must 
register and report as a political committee. The FEC has 
already done their own rules and regulations pertaining to 
this.
    Under this new rule, organizations that have triggered 
political committee status will be required to fund their 
activities in connection with Federal elections with specific 
percentages of hard and soft dollars. For example, voter drives 
that refer to both Federal and non-Federal candidates must be 
paid with at least 50 percent of hard dollars. In contrast, 
public communications that refer only to Federal candidates 
must be paid for with 100 percent hard dollars; and, under the 
FEC, political committees must comply with the source 
prohibitions and are limited to $5,000 per individual.
    H.R. 513, as I understand it, is intended to insulate 
members of Congress from any public criticism for a full year 
prior to elections. Even an organization that promotes, 
attacks, supports, or opposes a Federal candidate becomes a 
political committee and subject to all of the limitations and 
prohibitions of the law. It does not define what those terms 
cover. So, consequently, a political organization that 
criticizes a member for supporting something like Social 
Security privatization 12 months before the election is 
transformed into a political committee. This may explain why 
the bill has attracted support in some of the most surprising 
quarters.
    The bill subjects groups to Federal regulations that engage 
in voter registration and get-out-the-vote activity even if no 
mention of a Federal candidate is made during the course of the 
activity. The clear result will be to depress those activities, 
regardless of whether a Federal candidate is involved.
    Coming from a community such as mine that too often has 
been the target of voter suppression effects and efforts, I 
find this feature of the bill difficult to accept. We all are 
too familiar with the 527 ads run by the Swift Boat Veterans 
which aired during the 2004 Presidential election. I understand 
that those ads are now under investigation. I do not know 
whether that group and some of the other groups whose ads have 
been mentioned in the press complied with the law.
    Those investigations, however, should be allowed to run 
their course before Members of Congress and Congress itself 
embraces sweeping legislation that reaches far beyond that 
activity and effectively impedes public-minded voter 
registration efforts; and, if we don't, then we will be after 
all 501(c)s, period--(c)(3)s, (c)(4)s, (c)(7)s, (c) everything 
else. See for yourself.
    At this point, H.R. 513 appears to be an overreaction to a 
perceived shortcoming in existing law that may not even exist. 
H.R. 513 may turn back the gains realized this past election 
cycle with voter participation. It is without argument that 
increased voter participation strengthens our democracy. 
Congress should encourage these citizen-based activities 
informing the public and getting more citizens involved with 
our democracy.
    Now, I voted for BCRA to sever the connection between 
Federal officeholders and the raising of soft money. BCRA was 
necessary to cut the perceived corrupting link between 
officeholders, the formation and adoption of Federal policies, 
and non-Federal money, so-called soft money. It was not passed 
to impede legitimate voter registration and get-out-the-vote 
activities. I supported BCRA and have the utmost respect for 
its sponsors and will continue to defend the principles of 
campaign finance reform, but real campaign finance reform and 
not all of these bills that are coming before us that are just 
shortsighted, hurriedly considered, and poorly crafted pieces 
of legislation.
    If adopted, these bills will result in greater reliance on 
multi-million dollar donors and in the creation of shadowy 
organizations operating completely outside of any regulations.
    Mr. Chairman, on behalf of the minority, I say to you that 
I intend to file additional and minority views to the committee 
report; and thank you, Mr. Chairman.
    The Chairman. Mr. Ehlers.
    Mr. Ehlers. I will pass at this time. Thank you.
    The Chairman. Mr. Brady. Mr. Doolittle. Mr. Reynolds.
    Mr. Reynolds. First of all, Mr. Chairman, I request that, 
in the future, I can revise and extend my remarks.
    The Chairman. Without objection.
    Mr. Reynolds. I have listened very carefully to your 
opening statements and to the ranking member. Now I, when we 
had the Pence-Wynn markup, expressed some of my views then and 
put some of the things in the record. But it is clear to me 
that the ranking member must feel that 527s should not be under 
Federal jurisdiction, that even some of the sponsors of the 
legislation in either this House or the other body felt it was 
an oversight that we now have the FEC attempting to write 
regulations of interpretations of the court. We now see, as 
Shays-Meehan came and testified--the sponsors of Shays-Meehan 
of 513 came and testified before this committee, that as a 
glaring oversight.
    I keep hearing about all of this money that we were 
wringing out in BCRA, and yet we had on the record that the top 
four Democratic contributors to 527s were about $80 million on 
the Democratic side, and the Swift Boat top four contributors 
were about $27 million. I think that is big money that came 
into unregulated 527s on Federal elections.
    The Chairman. Just to note to the gentleman, we have put 
those up on the screen, of the top ones.
    Mr. Reynolds. Yes, you did. So I look at that being----
    The Chairman. And----
    Ms. Millender-McDonald. I am sorry, Mr. Chairman. Did you 
supply us with any of those outlines of dollars? Are those 
dollar amounts you are talking about there? What is on the 
screen?
    The Chairman. It is information that we had given in the 
last hearing about the different amounts of money.
    Ms. Millender-McDonald. But at this stage do I get to see 
those, too?
    Thank you.
    Mr. Reynolds. They were part of the record of my testimony 
last time, Ranking Member.
    The Chairman. Thank you.
    Mr. Reynolds. I guess it is just perfect that it is up 
there to take a look at the investment that is not subject to a 
level playing field of either candidates or our national 
parties. So wearing the other hat, as the person who chairs the 
NRCC, understanding that I have counseled members in the party 
that we are subject to felonies should we violate any law and 
that these tax-exempt organizations only risk losing their tax-
exempt status if they are in violation, first of all, brings 
the fact that the law of the land that has been affirmed by the 
courts is the current BCRA law.
    These are unregulated, big-time money wheelers and dealers 
on both sides of the aisle that aren't subject to Federal law. 
And I think, as I understand, we have, first of all, Pence-
Wynn, which was level the playing field by opening up the 
national parties to have the ability to have a level playing 
field with not only 527s but (c)(4)s and (c)(3)s; and I think I 
heard the chairman in his opening remarks understand that, 
while the Shays-Meehan bill before us would regulate 527s for 
Federal candidates, Federal officeholders and in compliance 
with the same aspect of what we have, you are concerned that 
big money like that on both sides of the aisle would run over 
into (c)(4)s and whatever may not solve some of that.
    But let us not, as we get into the discussion of the merits 
of 513 and the manager's amendment, have any thought here that 
to not put that type of money in check is doing somebody a 
great deal of service. The only risk they have in however they 
will function is their tax-exempt status.
    It is time to have a good debate in the House, and those 
people who can find some way to justify that that type of money 
that is up on the screen shouldn't find itself in oversight and 
regulation by law and clarify in statute the 527s on Federal 
candidates and parties will comply I just think are looking at 
some advantage they like of having that outside money playing 
in the world of congressional politics.
    Ms. Millender-McDonald. Mr. Chairman, I would like to 
respond to Mr. Reynolds, because I did not say that there were 
organizations who had violated the law. I said that there were 
some under investigation. But there was not anything in my 
statement that referred to that.
    And it is not my--I did not say that the 527s perhaps 
should not have any regulations, but I think that you are a 
proponent of less regulations. All of these bills we are seeing 
are just overly regulating regulations of 527s. So it just 
seems to me like if you are one who tends to be a proponent of 
less regulations, then we certainly should not be looking at 
overly regulating any organizations or any part of campaign 
reform.
    Mr. Reynolds. Will the gentlelady yield?
    Ms. Millender-McDonald. Yes.
    Mr. Reynolds. Do you believe under the current FEC 
regulations that 527s are regulated to Federal candidates in 
the same spirit of the BCRA law that you supported and is now 
law of the land?
    Ms. Millender-McDonald. Well, what the FEC has done now has 
attempted to try to regulate the 527s--and this is what we are 
talking about today--with reference to their participating in 
candidates' campaigns or in political activities that has a 
slant of getting involved in any Federal candidate or candidate 
activities. So this is what the FEC is attempting to do with 
its regulations.
    Mr. Reynolds. Attempting to do. So is there a regulation on 
the books that brings FEC under Federal compliance of BCRA, or 
is there not?
    Ms. Millender-McDonald. You know, we have addressed 527s in 
the last 5 years, and this is what the FEC has attempted to do 
just this January, is to try to see if we can bring 527s into 
some compliance. But how much more do we have to look at this 
issue? Why can't we allow those regulations that have been put 
on the books have an opportunity to be implemented? Why do we 
have to continue to regulate and over-regulate before we can 
see whether implementation has been done?
    Mr. Reynolds. I think the gentlelady, if she looks at it 
closer, might find that while there is discussion--you use the 
word ``attempt''--of proposed regulations, there is nothing 
that sets up regulation to stop that type of money in Federal 
campaigns that I have seen in the FEC. I have seen discussions; 
you used the word attempted.
    The Shays-Meehan bill at the very least, whether I agree 
that that is the best plan or not, would regulate 527s the same 
way you and I and every candidate for Federal office would be 
regulated subject to compliance and reporting and Federal 
felonies versus just taking away one's tax exemption in 2007 or 
2008 when finally somebody did something about it.
    Ms. Millender-McDonald. Mr. Reynolds, the Pence-Wynn bill 
is taking away this whole notion of limitations on aggregate 
limits, and therefore it will become unregulated for hard 
dollars to just flow.
    Mr. Reynolds. I urge the gentlelady to support me on this 
legislation, and then we will at least get this one----
    Ms. Millender-McDonald. I will look at this legislation, 
sir.
    The Chairman. The gentlelady from Michigan.
    Mrs. Miller. Yes, Mr. Chairman. I wasn't going to make an 
opening comment, but I will tell you, looking up at that screen 
about makes you ill thinking about what has happened.
    I will tell you, I was not in Congress when the BCRA was 
passed, but I would not have supported it. And I say that as a 
former Michigan Secretary of State who has come full circle on 
this whole issue of regulation. In fact, when I was the 
Michigan Secretary of State we actually were on the leading 
edge of what we thought was very progressive election reform in 
regards to issue advocacy. I actually was unable to get my 
legislature to move on it, so I actually promulgated rules as 
the chief elections officer saying that if a candidate's 
likeness or if the issue ad mentioned a candidate's name 45 
days out from an election that they would have to comply with 
the Michigan Campaign Finance Act, which I thought was a 
reasonable thing.
    I was sued by Right to Life and Planned Parenthood, from 
the right and the left, so I thought we were on the right 
track. But we actually lost that lawsuit in Federal court 
because of the first amendment, and I really came to agree with 
that. I realized we were impacting on the people's ability to 
have free speech. I think this BCRA that is now the law of the 
land also has a considerable amount of restrictions on people's 
ability to speak freely, certainly for Federal candidates.
    To give you one other personal example, during the last 
election cycle we had a Statewide ballot initiative in Michigan 
about a gaming issue in which there was a lot of interest. One 
side of the issue had asked me to be the spokesperson for their 
group, and I was not able to do that. Because I was a Federal 
candidate, I could not appear in any of these advertisements 
about an issue that I felt pretty strongly about.
    In other words, I don't think that was free speech. My 
ability to speak freely was restricted by BCRA. Otherwise, I 
would have been a felon. I would have been a criminal by 
speaking out about a Statewide ballot initiative.
    I think that is ridiculous; and I think what has happened, 
because of BCRA, by restricting contributions and the ability 
for individuals to donate openly with full transparency into 
political parties, instead forced all this money from these 
very rich individuals. I don't think you could call that 
grassroots politics looking at that screen. That is not the 
average American who is speaking.
    People need to know, in an effort of full transparency, 
really who is trying to impact the election process. I think 
what has happened with 527s was probably very predictable, and 
I do think a lot of the people that supported BCRA initially 
thought that this kind of a thing would happen.
    I do not support the Shays-Meehan bill. However, I am 
certainly willing to vote today on this committee to let it go 
to the full floor. I think there should be a full debate on it. 
I think all Members on both sides should have the ability to 
give it an up or down vote as well as the Pence-Wynn bill.
    I think the more interesting part of this debate will be 
the campaign reform community who is very righteously indignant 
so often about some of these things, and it will be interesting 
to see their response when we see what the vote actually will 
be on some of these bills.
    But I do think, again, the overriding challenge for 
Congress is to make sure that people have the ability to 
understand who is trying to influence the election process and 
their vote. Thank you.
    The Chairman. The gentlelady from California.
    Ms. Lofgren. Thank you, Mr. Chairman.
    It was three and a half years ago that Congress passed and 
the President signed the Bipartisan Campaign Reform Act; and 
that bill was really the culmination of years of work by many 
members of Congress, and in particular Congressmen Shays and 
Meehan. As I am sure you will recall, it took a long time for 
consideration, and ultimately the bill came to the floor 
because of a discharge petition. I was number 22 in signing 
that petition. And, of course, one once it got on the floor it 
passed by a large margin, 240 by 189.
    I think every member--every Democratic member of this 
committee voted for it and every Republican member voted no, 
with the exception of our new member who was not yet a Member 
of Congress.
    I think that Shays-Meehan had a clear purpose. It took 
Members of Congress out of the business of asking lobbyists and 
special interests for large, unregulated donations. There is 
something unseemly about a Senator or a Congressman asking a 
donor for $100,000 or $250,000 or even a million dollars, and 
the campaign finance reform bill outlawed that.
    The legislation went into effect November 6, 2002, and I 
think it had a terrific impact on the 2004 elections. Both 
parties were able to wean themselves from soft money and were 
successful in raising funds through small dollar donations, 
which is more of the grassroots democracy that we want.
    According to the Committee for the Study of the American 
Electorate, we had a surge in voter turnout in 2004. The 
turnout rose by 6.4 percent, the biggest election increase 
since 1952. And that is good. We want voters to be motivated 
and get involved. It is a good thing for our democracy.
    But I think it is unfortunate that the bill that we are 
considering today would roll back this progress. I believe it 
would depress voter turnout, decrease independent get-out-the-
vote efforts, reduce education; and, worst of all, it will 
violate Americans' right to free speech and association.
    The 527s are independent; and, by law, they are not 
permitted to coordinate with candidates or elected officials. I 
have not heard that any group has violated the rule. If you 
have, then we ought to refer the information you have to the 
U.S. Attorney, because it is against the law.
    The independent activities by 527s groups is 
constitutionally protected. In upholding McCain-Feingold, the 
Supreme Court distinguished between fully independent activity 
and the activities of parties under the control of candidates.
    The people who contribute to these organizations are 
motivated by their beliefs. No Member of Congress has called 
and asked them to give 100, 300, a million, any amount of 
money. That is illegal. Under the first amendment, they have a 
right to contribute to what they believe in.
    My colleagues who so strenuously opposed the Shays-Meehan 
bill just a few years ago now want to push to limit the ability 
of individuals and independent groups to organize and speak 
out. Why is that?
    I think that this exercise, along with the speedy passage 
of Pence-Wynn, is really an effort by the Republican majority 
and Congress to cement their power. By pushing Pence-Wynn, we 
will roll back the reforms of Watergate so you can raise 
millions of dollars from your wealthy donors; and by marking up 
Shays-Meehan, you will shut down outside independent groups, 
some of whom have disagreed with you effectively and you--even 
though that proposal is unconstitutional, it would stop, at 
least temporarily, grassroots organizations from raising money 
until the courts throw it out.
    These two bills, if passed together by the Republican 
majority, once again the rules will be changed in the middle of 
the game to the advantage of the majority. And that may be what 
you can do with your power, but it doesn't make it right.
    I am for campaign reform as long as it is true and 
authentic. Certainly you do not have to allow independent 
groups a tax deduction. No one is arguing that the 527 tax 
deduction is protected by the first amendment. However, the 
right to speak and to donate independent from campaigns is 
protected by the first amendment, and I would hope that we 
would keep in mind that the first amendment is important, we 
should honor our Constitution, and take it seriously.
    So I very seriously disagree with what is going on here 
today and yield back, Mr. Chairman.
    The Chairman. I would just like to make a couple points, 
and then members can talk, and we will move on this and have 
further discussion.
    First of all, nothing in the Shays-Meehan bill would hamper 
any current investigation.
    As for controlling the majority of the House, I doubt Mr. 
Meehan would sponsor a bill that would lead to the Democrat 
party or to the Republican party keeping control. So, in other 
words, I think Mr. Meehan's and Mr. Shays' intentions are 
correct. If this bill would in fact consolidate our power, I 
would question why a Democrat would sponsor it and why other 
Democrats support this bill.
    Ms. Lofgren. If the gentleman would yield. I think the 
world of Mr. Meehan. I serve with him on the Judiciary 
Committee. I think in this particular instance he is incorrect. 
The fact that Mr. Shays supported the Shays-Meehan bill and it 
took a discharge petition actually does prove the point that 
occasionally each party has members that are mavericks and, in 
your view, made a mistake in Mr. Shays' case and, in our view, 
made a mistake in Mr. Meehan's case this time.
    The Chairman. Reclaiming my time. I make no bones about it. 
I voted against BCRA. I fought against BCRA. But it is here. 
The authors of this bill have said they were going to take soft 
money out. It didn't happen. And that includes McCain and 
Feingold, the two senators over there. They have recognized 
this. I am not saying in my mind philosophically it is the 
perfect way to do this, but I think it merits the vote, and I 
am going to support it and to vote for it on the floor. But I 
think it does address the problem of the soft money.
    If I could, for the record, I would like to go to the next 
slide, Joint Victory Campaign. Because the statements have been 
made, Members of Congress do not--well, I will get to that in a 
second.
    The Joint Victory Campaign fund shows a few of the 
contributors to that. No small amount of change.
    America Coming Together. If you could put that slide up. 
Joint Victory Campaign. George Soros again. Service Employees. 
Peter Lewis. Alida Rockefeller. Robert Glaser.
    The next slide is The Media Fund. Joint Victory Campaign. 
Some other people. Joseph Field. American Federation of 
Teachers.
    MoveOn.org. George Soros. Herbert Sandler. Peter Lewis. 
Steve Bing. Kind of repeats the names again.
    America Votes. Bingo. We can cross-match those names again.
    Now, as far as Members of Congress not asking for soft 
money, how about employees, former employees, or at-the-same-
time employees?
    Let us go to the next slide.
    Let us see, in 2004, Executive Committee of the Democratic 
National Committee. Chair senator--a senator's PAC. And, at the 
same time, 2004 at some point in time, 2004 election cycle.
    The next one. I think that staff kept a busy year afoot.
    The next one.
    Ms. Millender-McDonald. But did BCRA prohibit that, Mr. 
Chairman?
    The Chairman. If we want to say nobody is asking for money 
here, these are employees that are--reclaiming my time.
    The next picture. Kerry Campaign. Chief operating. And 
America Coming Together.
    So I must say, I am not saying anything is wrong here, 
but----
    Ms. Millender-McDonald. Mr. Chairman, what is wrong here?
    The Chairman. Could I please finish?
    Let us not say that people are not involved with political 
organizations or Members' offices or that they are not out 
doing other things or asking for things.
    Ms. Millender-McDonald. Mr. Chairman, clearly, each 
American has some philosophical views of one party or the 
other. But it certainly should not circumvent them from getting 
involved in this process of 527 organizations. And you have 
slanted this whole theme with nothing but Democratic 
organizations. Aren't there--weren't there some Republican 
groups that came together?
    The Chairman. I assumed you would provide that.
    Ms. Millender-McDonald. Had you told me you were going to 
go this far, I guess I would have.
    The Chairman. This bill is going to apply to the Swift Boat 
Veterans too. I think it should.
    Ms. Lofgren. I think the fact that individuals once worked 
for an elected official doesn't mean that the elected official 
is directing their activity. If it does, that is a proposition 
that you are making today, then Mr. DeLay has a lot of 
explaining to do about Mr. Abramoff. I think that that is a 
leap that needs to be proven and not assumed.
    The Chairman. I am not saying anything here.
    Look, Mr. Ickes worked for both at the same time. Now, if 
the ethics committee would like to constitute and take a look 
at him or anybody else, that is fine with me.
    Ms. Millender-McDonald. Let me say this, Mr. Chairman. I 
have respected you because you have always shown me the fair 
and balanced approach of your chairmanship. Had you said to me 
that we should have a display of these types of things showing 
one side or the other, I would have been prepared for that. I 
did not. I came purposely to talk about the Shays-Meehan bill.
    But you have displayed here a whole litany of things that 
the Democratic force or those you perceive as--merely because 
they were once employees of Democratic Presidents or whatever--
that they should not have the autonomy to become an independent 
person working with a 527 organization. I think that is wrong. 
I mean, where are we going here in this country if you are 
going to shackle folks from when they leave working with either 
a Member of Congress or a President, albeit Republican or 
Democrat, that they should not engage in independent groups?
    And may I say to Mrs. Miller, I am sorry that maybe you 
weren't here when BCRA was before us, because in my view we did 
not limit Federal candidates. We had $1.7 billion raised 
between these two parties for the last election. That doesn't 
seem to be limiting any Federal candidates or at least Federal 
parties.
    The Chairman. Without objection, I will put the record 
open; and we will get the Swift Boat, Mr. Corsi, and put his 
pictures in there and any connections he might have had. If he 
worked two jobs at the same time, I would actually entertain 
that.
    Let's move on and have further discussion.
    Mr. Ehlers.
    Mr. Ehlers. I passed earlier because I wanted the benefit 
of the discussion. I am not sure I have received very much 
benefit from it, so I will proceed to offer my comments.
    I just am sitting here somewhat in amazement talking about 
this bill and the Pence-Wynn being overregulation. It seems to 
me the overregulation took place when we passed BCRA. Be that 
as it may, it is the law of the land. But I think the worst 
part about BCRA has nothing to do with me as a Member of 
Congress or any of the other aspects, but the debilitating 
effects upon political parties.
    What I find astounding is to sit here and listen to people 
saying that 527s are fine, these are just citizens getting 
together to provide information and voter registration and 
that. That is exactly what the parties do. And since we so 
severely limited the ability of parties in BCRA, I fail to 
understand why 527s are constitutionally protected and 
political parties are not. That makes absolutely no sense.
    It was clear in the last--I think these are a detriment to 
the political process; and I find it very surprising that the 
minority party, which is always complaining about wealthy 
Republican contributors, is arguing that individuals, no matter 
what their party, should be free to contribute $25 million or 
$50 million to an organization without any regulation other 
than their tax deductibility. It just boggles my mind, coming 
to hear that from the minority party at this point, because 
they argued the other way when we were debating BCRA. I don't 
want to accuse anyone of hypocrisy, but I would simply say I am 
just surprised to hear that.
    I think 527s are a curse to the political process, and I 
don't care if it is a Republican or Democrat, in the way they 
behaved in the last election, lack of accountability. What 
floors me in this--and you may well find this in the Republican 
ones, too, I don't know. But the shifting of money back and 
forth, which is usually a sign of some chicanery going on, 
where the Joint Victory Campaign got a bunch of money and they 
proceeded to give $18 million plus to America Coming Together, 
another group, they also proceeded to give $44 million plus to 
the Media Fund, and so on down. The way money flowed back and 
forth reminds me of the Nixon Watergate era. We tried to learn 
something from that with the Watergate experience, and that is 
when we passed the first campaign finance law.
    I think what we have tried to do in BCRA was a noble 
attempt. I voted for every alternative to it, because I thought 
all of them had good points and were better than BCRA. But, be 
that as it may, BCRA is the law of the land; and I am willing 
to live under it. But I am not willing to have the tightly 
regulated role of BCRA regulating what the political parties 
can do and a totally hands-off approach to 527s which are 
performing much of the same functions as the political parties. 
That makes absolutely no sense to me.
    It was on that basis I supported the Pence-Wynn bill we 
reported out. I am not totally happy with that bill, but at 
least it treated parties and 527s equally. And that is the way 
I think it should be. So I think it is just unconscionable 
that----
    Ms. Millender-McDonald. Will the gentleman yield?
    Mr. Ehlers. No, I will not yield.
    I think it is totally unconscionable to say that 527s don't 
even have to report to the FEC. I was very disappointed when 
the FEC took that position during the last election. I think 
most of us in the political realm assumed that they would do 
that, and that is why we thought the 527s were a temporary 
phenomenon as a political organization. But now that they have 
refused to do it, I think I am convinced we have to do it by 
law and at least require the full and complete reporting that 
we are subjected to, that the political parties are subjected 
to. That is the very least we can do, and that will take place 
under either of these bills that we are presenting.
    I yield back the balance of my time.
    The Chairman. I would like to----
    Ms. Millender-McDonald. Mr. Chairman, I would just like to 
ask the gentleman a question or clarify something or at least 
attempt to do so.
    BCRA did not limit the parties from voter registration. 
They can still do that. It is just not with soft money. It is 
with hard money. So BCRA did not limit the parties from doing 
voter registration. And if you say that----
    Mr. Ehlers. So would the gentlelady yield?
    Ms. Millender-McDonald. I will yield. I will allow you 
time. You did not allow me, but of course----
    Mr. Ehlers. Well, because I did not have much.
    Ms. Millender-McDonald. Yeah, right.
    Mr. Ehlers. So you think that under BCRA that some member 
of your party or my party could contribute to their party to 
the amount of $23,450,000?
    Ms. Millender-McDonald. I am sorry?
    Mr. Ehlers. You think that under BCRA George Soros or 
someone on our side could contribute $25 million to----
    Ms. Millender-McDonald. No, what I am simply saying is that 
you made the statement that BCRA disallowed the parties from 
doing voter registration.
    Mr. Ehlers. No, I did not say that. I----
    Ms. Millender-McDonald. Then I misunderstood.
    Mr. Ehlers. We regulated the receipt of money.
    Ms. Millender-McDonald. We can still do that with the 
parties, but it is just with hard money.
    Mr. Ehlers. I am talking about the money. The money is the 
problem. Remember with Watergate, follow the money? I am 
following the money here.
    Ms. Millender-McDonald. But if we were to learn from 
Watergate, then we certainly should not be putting more money 
into this whole notion of campaign elections as in the Pence-
Wynn bill.
    Ms. Lofgren. Would the gentlelady yield?
    The Chairman. Controlling the time here. We shouldn't put 
more money, and that is what Shays and Meehan want to do, limit 
the amount of money in the system, period. Pence-Wynn, from 
their point of view, want to take the aggregate up to a level 
playing field. But Shays-Meehan clearly, in my opinion, wants 
to get money out of the system; they thought they were getting 
it out with BCRA.
    Ms. Lofgren. Would the gentleman yield?
    I carry the Constitution with me at all times, and it is 
times like this that I find that very handy. The first 
amendment actually matters, and it does govern what we do here.
    It says: Congress shall make no law--ta da--prohibiting the 
free exercise of the freedom of speech. And when we passed 
BCRA, the court was faced with a conundrum. How do you control 
speech--every right has some limits. As we know, you can't yell 
fire in a crowded theater. And the rationale for allowing that 
to proceed was about corruption. It is about individual 
candidates and officeholders and their corruption in dealing 
with money and the opportunity for money to impact the 
legislative process and the like. And it was on that basis only 
that the courts said, yes, BCRA is constitutional.
    You cannot find that rationale in the five--the free 
exercise of speech, whether it is the NRA or whether it is 
Planned Parenthood or whether it is Move On or any of the 
other--the Swift Boat guys, that rationale was not present.
    Now I assume from the charts that the chairman has put up 
that behind those charts is this thought: That if somebody had 
once worked for a politician, by extension, the corruption 
constitutional rationale is present. I don't believe that the 
court has ever found that. By that rationale, the chairman's 
former press secretary's knowledge of the Tigua tribe would be 
imputed to him, and I don't think that is appropriate. I don't 
think Mr. Abramoff's activities can be imputed to the majority 
leader simply because he was once employed. No one believes 
that that is the case. You have to have a factual proof of 
knowledge and activity, not just that somebody once worked for 
somebody else.
    So this is--what we are doing is the worst of both worlds. 
We are once again inviting corruption in the political fund-
raising arena by allowing officeholders to raise vastly greater 
sums of money, while unconstitutionally limiting individuals 
who we may not agree with who have nothing to do with the 
political officeholders. You know, we can do this. The courts 
are going to drop it down. But I think there is a rationale and 
a motive here, and I don't think it is a healthy one. And I 
think----
    The Chairman. Would the gentlelady yield just for a second? 
This is not really a five-minute time. I would like to move the 
bill, and then we can have the debate.
    I would, though, since we have been mentioned, like to say 
I appreciate the clearance from you. For example, if you had a 
former press secretary who was bribed by Saddam Hussein's 
regime, I would not connect that to any----
    Ms. Lofgren. Of course not.
    The Chairman. So I understand and agree with that. With 
this, let me----
    Mr. Ehlers. I would just ask one question for clarification 
on the Constitution argument.
    Ms. Lofgren. Right.
    Mr. Ehlers. How does that fit the political parties then? 
Why don't they have the same right to free speech as the 527s?
    Ms. Lofgren. Well, the political parties actually do, 
except to the extent that they are connected to Federal 
officeholders. That is why the FEC has gone into a regulatory 
scheme that talks about how much can be soft money and how much 
hard money and voter registration drives. It is a very 
complicated scheme that none of us much like, I will admit. But 
it is only the connection with Federal officeholders that ties 
up the State parties. And, you know, maybe there is a more 
elegant way to regulate that, but the constitutional issues I 
think are quite clear.
    Mr. Ehlers. My point simply is that I thought both should 
be treated the same.
    The Chairman. Mr. Doolittle, and then we will move on to 
the bill.
    Mr. Doolittle. Mr. Chairman, I am just having a great time. 
My Democrat colleagues are sitting up here and espousing all 
these things and haven't cracked a smile once. This is 
hilarious. I mean, you have rigged, wired, and stacked the 
system, and I compliment you. You have got a Republican 
President to go along with you and sign the turkey into law. So 
now we are stuck with it.
    But, I mean, this is just ludicrous. The top four donors of 
527s--you know, we talk about getting money out of politics. 
They have given over $71 million to these groups. Republicans, 
they always tell us how we have got millionaires. Our guys are 
too cheap to give that kind of money. Where do you find these 
people? I wish you could tell me. I would love to know because 
we don't come close to that. You have done it magnificently. 
You have done it with the cooperation of some Republicans. It 
is just yet another illustration of how the law has been 
consistently abused in this area by one party using it as a 
club against the other. You did it to us. You did it well. I 
compliment you.
    We will eventually figure it out, maybe. That is what 
happened with the soft money. You guys got going on that first, 
and then we finally figured it out and got pretty good at it, 
and so it was time to change the rules again.
    In one of the sweet ironies, though, which I love of 
campaign finance regulation, there is always the unexpected, 
and the unexpected was this tiny little 527, the Swift Boat 
Veterans, which raised a miniscule fraction of money compared 
to these big things that we have seen up on the screen. But 
their message broke through, and it got Bush reelected. That 
was sweet. I did enjoy that. And maybe it will happen again. 
But it happened in spite of your best efforts. You know, all 
that rhetoric we heard about we have got to get the money out 
of politics, and that was the whole premise of Shays-Meehan, 
and this is the result, $71 million by the top four big 
Democrats here in 527s.
    Ms. Millender-McDonald. Will the gentleman yield?
    Mr. Doolittle. Well, I will, but let me--you know, I  have 
been absorbing all of this; I want to get some more of this out 
because it is just hilarious that, you know, now you are waving 
the Constitution and quoting the first amendment. I love it. 
You know, the first amendment, quote: ``Congress shall make no 
law abridging the freedom of speech.'' that is what Shays-
Meehan was all about. Unfortunately, it went through the filter 
of the Supreme Court which found that you can post a monument 
to the Ten Commandments on the grounds of the State Capitol and 
that doesn't violate the Constitution, but if in a courtroom 
you have a framed copy of the Ten Commandments, that does 
violate the Constitution.
    This decision on BCRA makes about as much sense as those 
two decisions. And I would submit to you that the law is just 
persistently abused. The only way to address this is to 
deregulate and let people make the choices they make and report 
what they are doing. It is ludicrous to tie the hands of the 
parties and sit here and piously pretend that that is okay.
    And then we have these unaccountable 527s, which will 
result in more negative campaigns and in less accountability as 
a result of this, and less voter participation, ultimately, 
than we have presently had.
    Ms. Millender-McDonald. Will the gentleman yield?
    Mr. Doolittle. Now, if I have any time and you want me to 
yield, I will yield.
    Ms. Millender-McDonald. Please. Thank you.
    Mr. Doolittle, did the 527s violate any law? Did they 
violate any law?
    Mr. Doolittle. No, because you cleverly wrote the law so 
they didn't. You got your 527s in the queue, all lined up. You 
know, Tom DeLay had the first 527, and you guys filed a RICO 
charge against him. I had to raise hard money and donate to him 
and pay his $600,000 in legal fees. I guess you figured you 
didn't want him getting too far ahead of you, so you needed to 
slow him down a little bit.
    Ms. Millender-McDonald. Well, Mr. Doolittle.
    The Chairman. Anybody else, either side, like to disparage 
today?
    Ms. Millender-McDonald. Mr. Doolittle, you said that the 
Democrats were the ones who got way out on this, but now you 
have said that Mr. DeLay was out in front of this early on.
    Mr. Doolittle. I think Mr. DeLay educated you on what you 
could do with the law. You slowed him down, you got a slew of 
big 527s.
    Ms. Millender-McDonald. I thank you so much for your 
animation. I really enjoy it.
    Mr. Doolittle. You are welcome.
    Ms. Millender-McDonald. But let me say this. It was stated 
earlier that 527s are a curse, and yet do you think voter 
registration of those who have voices who were not heard is a 
curse?
    Mr. Doolittle. The parties do registration. You just made 
it much harder by having to use hard dollars every time there 
is a Federal election, which is every other election.
    Ms. Millender-McDonald. It is so nice to have you in 
California, Mr. Doolittle.
    The Chairman. With that, let me lay before the committee 
the bill H.R. 513, open to an amendment. And I do offer an 
amendment in the nature of a substitute.
    [The information follows:]

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``527 Reform Act of 2005''.

SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS.

  (a) Definition of Political Committee.--Section 301(4) of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 431(4)) is amended--
          (1) by striking the period at the end of subparagraph (C) and 
        inserting ``; or''; and
          (2) by adding at the end the following:
                  ``(D) any applicable 527 organization.''.
  (b) Definition of Applicable 527 Organization.--Section 301 of such 
Act (2 U.S.C. 431) is amended by adding at the end the following new 
paragraph:
          ``(27) Applicable 527 organization.--
                  ``(A) In general.--For purposes of paragraph (4)(D), 
                the term `applicable 527 organization' means a 
                committee, club, association, or group of persons 
                that--
                          ``(i) has given notice to the Secretary of 
                        the Treasury under section 527(i) of the 
                        Internal Revenue Code of 1986 that it is to be 
                        treated as an organization described in section 
                        527 of such Code; and
                          ``(ii) is not described in subparagraph (B).
                  ``(B) Excepted organizations.--A committee, club, 
                association, or other group of persons described in 
                this subparagraph is--
                          ``(i) an organization described in section 
                        527(i)(5) of the Internal Revenue Code of 1986;
                          ``(ii) an organization which is a committee, 
                        club, association or other group of persons 
                        that is organized, operated, and makes 
                        disbursements exclusively for paying expenses 
                        described in the last sentence of section 
                        527(e)(2) of the Internal Revenue Code of 1986 
                        or expenses of a newsletter fund described in 
                        section 527(g) of such Code;
                          ``(iii) an organization which is a committee, 
                        club, association, or other group that consists 
                        solely of candidates for State or local office, 
                        individuals holding State or local office, or 
                        any combination of either, but only if the 
                        organization refers only to one or more non-
                        Federal candidates or applicable State or local 
                        issues in all of its voter drive activities and 
                        does not refer to a Federal candidate or a 
                        political party in any of its voter drive 
                        activities; or
                          ``(iv) an organization described in 
                        subparagraph (C).
                  ``(C) Applicable organization.--For purposes of 
                subparagraph (B)(iv), an organization described in this 
                subparagraph is a committee, club, association, or 
                other group of persons whose election or nomination 
                activities relate exclusively to--
                          ``(i) elections where no candidate for 
                        Federal office appears on the ballot; or
                          ``(ii) one or more of the following purposes:
                                  ``(I) Influencing the selection, 
                                nomination, election, or appointment of 
                                one or more candidates to non-Federal 
                                offices.
                                  ``(II) Influencing one or more 
                                applicable State or local issues.
                                  ``(III) Influencing the selection, 
                                appointment, nomination, or 
                                confirmation of one or more individuals 
                                to non-elected offices.
                  ``(D) Exclusivity test.--A committee, club, 
                association, or other group of persons shall not be 
                treated as meeting the exclusivity requirement of 
                subparagraph (C) if it makes disbursements aggregating 
                more than $1,000 for any of the following:
                          ``(i) A public communication that promotes, 
                        supports, attacks, or opposes a clearly 
                        identified candidate for Federal office during 
                        the 1-year period ending on the date of the 
                        general election for the office sought by the 
                        clearly identified candidate (or, if a runoff 
                        election is held with respect to such general 
                        election, on the date of the runoff election).
                          ``(ii) Any voter drive activity during a 
                        calendar year, except that no disbursements for 
                        any voter drive activity shall be taken into 
                        account under this subparagraph if the 
                        committee, club, association, or other group of 
                        persons during such calendar year--
                                  ``(I) makes disbursements for voter 
                                drive activities with respect to 
                                elections in only 1 State and complies 
                                with all applicable election laws of 
                                that State, including laws related to 
                                registration and reporting requirements 
                                and contribution limitations;
                                  ``(II) refers to one or more non-
                                Federal candidates or applicable State 
                                or local issues in all of its voter 
                                drive activities and does not refer to 
                                any Federal candidate or any political 
                                party in any of its voter drive 
                                activities;
                                  ``(III) does not have a candidate for 
                                Federal office, an individual who holds 
                                any Federal office, a national 
                                political party, or an agent of any of 
                                the foregoing, control or materially 
                                participate in the direction of the 
                                organization, solicit contributions to 
                                the organization (other than funds 
                                which are described under clauses (i) 
                                and (ii) of section 323(e)(1)(B)), or 
                                direct disbursements, in whole or in 
                                part, by the organization; and
                                  ``(IV) makes no contributions to 
                                Federal candidates.
                  ``(E) Certain references to federal candidates not 
                taken into account.--For purposes of subparagraphs 
                (B)(iii) and (D)(ii)(II), a voter drive activity shall 
                not be treated as referring to a clearly identified 
                Federal candidate if the only reference to the 
                candidate in the activity is--
                          ``(i) a reference in connection with an 
                        election for a non-Federal office in which such 
                        Federal candidate is also a candidate for such 
                        non-Federal office; or
                          ``(ii) a reference to the fact that the 
                        candidate has endorsed a non-Federal candidate 
                        or has taken a position on an applicable State 
                        or local issue, including a reference that 
                        constitutes the endorsement or position itself.
                  ``(F) Certain references to political parties not 
                taken into account.--For purposes of subparagraphs 
                (B)(iii) and (D)(ii)(II), a voter drive activity shall 
                not be treated as referring to a political party if the 
                only reference to the party in the activity is--
                          ``(i) a reference for the purpose of 
                        identifying a non-Federal candidate;
                          ``(ii) a reference for the purpose of 
                        identifying the entity making the public 
                        communication or carrying out the voter drive 
                        activity; or
                          ``(iii) a reference in a manner or context 
                        that does not reflect support for or opposition 
                        to a Federal candidate or candidates and does 
                        reflect support for or opposition to a State or 
                        local candidate or candidates or an applicable 
                        State or local issue.
                  ``(G) Applicable state or local issue.--For purposes 
                of this paragraph, the term `applicable State or local 
                issue' means any State or local ballot initiative, 
                State or local referendum, State or local 
                constitutional amendment, State or local bond issue, or 
                other State or local ballot issue.''.
  (c) Definition of Voter Drive Activity.--Section 301 of such Act (2 
U.S.C. 431), as amended by subsection (b), is further amended by adding 
at the end the following new paragraph:
          ``(28) Voter drive activity.--The term `voter drive activity' 
        means any of the following activities 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):
                  ``(A) Voter registration activity.
                  ``(B) Voter identification.
                  ``(C) Get-out-the-vote activity.
                  ``(D) Generic campaign activity.
                  ``(E) Any public communication related to activities 
                described in subparagraphs (A) through (D).
        Such term shall not include any activity described in 
        subparagraph (A) or (B) of section 316(b)(2).''.
  (d) Regulations.--The Federal Election Commission shall promulgate 
regulations to implement this section not later than 60 days after the 
date of enactment of this Act.
  (e) Effective Date.--The amendments made by this section shall take 
effect on the date which is 60 days after the date of enactment of this 
Act.

SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON-
                    FEDERAL ACTIVITIES.

  (a) In General.--Title III of the Federal Election Campaign Act of 
1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the 
following:

``SEC. 325. ALLOCATION AND FUNDING RULES FOR CERTAIN EXPENSES RELATING 
                    TO FEDERAL AND NON-FEDERAL ACTIVITIES.

  ``(a) In General.--In the case of any disbursements by any political 
committee that is a separate segregated fund or nonconnected committee 
for which allocation rules are provided under subsection (b)--
          ``(1) the disbursements shall be allocated between Federal 
        and non-Federal accounts in accordance with this section and 
        regulations prescribed by the Commission; and
          ``(2) in the case of disbursements allocated to non-Federal 
        accounts, may be paid only from a qualified non-Federal 
        account.
  ``(b) Costs To Be Allocated and Allocation Rules.--
          ``(1) In general.--Disbursements by any separate segregated 
        fund or nonconnected committee, other than an organization 
        described in section 323(b)(1), for any of the following 
        categories of activity shall be allocated as follows:
                  ``(A) 100 percent of the expenses for public 
                communications or voter drive activities that refer to 
                one or more clearly identified Federal candidates, but 
                do not refer to any clearly identified non-Federal 
                candidates, shall be paid with funds from a Federal 
                account, without regard to whether the communication 
                refers to a political party.
                  ``(B) At least 50 percent, or a greater percentage if 
                the Commission so determines by regulation, of the 
                expenses for public communications and voter drive 
                activities that refer to one or more clearly identified 
                candidates for Federal office and one or more clearly 
                identified non-Federal candidates shall be paid with 
                funds from a Federal account, without regard to whether 
                the communication refers to a political party.
                  ``(C) At least 50 percent, or a greater percentage if 
                the Commission so determines by regulation, of the 
                expenses for public communications or voter drive 
                activities that refer to a political party, but do not 
                refer to any clearly identified Federal or non-Federal 
                candidate, shall be paid with funds from a Federal 
                account, except that this paragraph shall not apply to 
                communications or activities that relate exclusively to 
                elections where no candidate for Federal office appears 
                on the ballot.
                  ``(D) At least 50 percent, or a greater percentage if 
                the Commission so determines by regulation, of the 
                expenses for public communications or voter drive 
                activities that refer to a political party and refer to 
                one or more clearly identified non-Federal candidates, 
                but do not refer to any clearly identified Federal 
                candidates, shall be paid with funds from a Federal 
                account, except that this paragraph shall not apply to 
                communications or activities that relate exclusively to 
                elections where no candidate for Federal office appears 
                on the ballot.
                  ``(E) Unless otherwise determined by the Commission 
                in its regulations, at least 50 percent of any 
                administrative expenses, including rent, utilities, 
                office supplies, and salaries not attributable to a 
                clearly identified candidate, shall be paid with funds 
                from a Federal account, except that for a separate 
                segregated fund such expenses may be paid instead by 
                its connected organization.
                  ``(F) At least 50 percent, or a greater percentage if 
                the Commission so determines by regulation, of the 
                direct costs of a fundraising program or event, 
                including disbursements for solicitation of funds and 
                for planning and administration of actual fundraising 
                events, where Federal and non-Federal funds are 
                collected through such program or event shall be paid 
                with funds from a Federal account, except that for a 
                separate segregated fund such costs may be paid instead 
                by its connected organization. This paragraph shall not 
                apply to any fundraising solicitations or any other 
                activity that constitutes a public communication.
          ``(2) Certain references to federal candidates not taken into 
        account.--For purposes of paragraph (1), a public communication 
        or voter drive activity shall not be treated as referring to a 
        clearly identified Federal candidate if the only reference to 
        the candidate in the communication or activity is--
                  ``(A) a reference in connection with an election for 
                a non-Federal office in which such Federal candidate is 
                also a candidate for such non-Federal office; or
                  ``(B) a reference to the fact that the candidate has 
                endorsed a non-Federal candidate or has taken a 
                position on an applicable State or local issue (as 
                defined in section 301(27)(G)), including a reference 
                that constitutes the endorsement or position itself.
          ``(3) Certain references to political parties not taken into 
        account.--For purposes of paragraph (1), a public communication 
        or voter drive activity shall not be treated as referring to a 
        political party if the only reference to the party in the 
        communication or activity is--
                  ``(A) a reference for the purpose of identifying a 
                non-Federal candidate;
                  ``(B) a reference for the purpose of identifying the 
                entity making the public communication or carrying out 
                the voter drive activity; or
                  ``(C) a reference in a manner or context that does 
                not reflect support for or opposition to a Federal 
                candidate or candidates and does reflect support for or 
                opposition to a State or local candidate or candidates 
                or an applicable State or local issue.
  ``(c) Qualified Non-Federal Account.--
          ``(1) In general.--For purposes of this section, the term 
        `qualified non-Federal account' means an account which consists 
        solely of amounts--
                  ``(A) that, subject to the limitations of paragraphs 
                (2) and (3), are raised by the separate segregated fund 
                or nonconnected committee only from individuals, and
                  ``(B) with respect to which all requirements of 
                Federal, State, or local law (including any law 
                relating to contribution limits) are met.
          ``(2) Limitation on individual donations.--
                  ``(A) In general.--A separate segregated fund or 
                nonconnected committee may not accept more than $25,000 
                in funds for its qualified non-Federal account from any 
                one individual in any calendar year.
                  ``(B) Affiliation.--For purposes of this paragraph, 
                all qualified non-Federal accounts of separate 
                segregated funds or nonconnected committees which are 
                directly or indirectly established, financed, 
                maintained, or controlled by the same person or persons 
                shall be treated as one account.
          ``(3) Fundraising limitation.--
                  ``(A) In general.--No donation to a qualified non-
                Federal account may be solicited, received, directed, 
                transferred, or spent by or in the name of any person 
                described in subsection (a) or (e) of section 323.
                  ``(B) Funds not treated as subject to act.--Except as 
                provided in subsection (a)(2) and this subsection, any 
                funds raised for a qualified non-Federal account in 
                accordance with the requirements of this section shall 
                not be considered funds subject to the limitations, 
                prohibitions, and reporting requirements of this Act 
                for any purpose (including for purposes of subsection 
                (a) or (e) of section 323 or subsection (d)(1) of this 
                section).
  ``(d) Definitions.--
          ``(1) Federal account.--The term `Federal account' means an 
        account which consists solely of contributions subject to the 
        limitations, prohibitions, and reporting requirements of this 
        Act. Nothing in this section or in section 323(b)(2)(B)(iii) 
        shall be construed to infer that a limit other than the limit 
        under section 315(a)(1)(C) applies to contributions to the 
        account.
          ``(2) Nonconnected committee.--The term `nonconnected 
        committee' shall not include a political committee of a 
        political party.
          ``(3) Voter drive activity.--The term `voter drive activity' 
        has the meaning given such term in section 301(28).''.
  (b) Reporting Requirements.--Section 304(e) of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 434(e)) is amended--
          (1) by redesignating paragraphs (3) and (4) as paragraphs (4) 
        and (5); and
          (2) by inserting after paragraph (2) the following new 
        paragraph:
          ``(3) Receipts and disbursements from qualified non-federal 
        accounts.--In addition to any other reporting requirement 
        applicable under this Act, a political committee to which 
        section 325(a) applies shall report all receipts and 
        disbursements from a qualified non-Federal account (as defined 
        in section 325(c)).''.
  (c) Regulations.--The Federal Election Commission shall promulgate 
regulations to implement the amendments made by this section not later 
than 180 days after the date of enactment of this Act.
  (d) Effective Date.--The amendments made by this section shall take 
effect on the date which is 180 days after the date of enactment of 
this Act.

SEC. 4. CONSTRUCTION.

  No provision of this Act, or amendment made by this Act, shall be 
construed--
          (1) as approving, ratifying, or endorsing a regulation 
        promulgated by the Federal Election Commission;
          (2) as establishing, modifying, or otherwise affecting the 
        definition of political organization for purposes of the 
        Internal Revenue Code of 1986; or
          (3) as affecting the determination of whether a group 
        organized under section 501(c) of the Internal Revenue Code of 
        1986 is a political committee under section 301(4) of the 
        Federal Election Campaign Act of 1971.

SEC. 5. JUDICIAL REVIEW.

  (a) Special Rules for Actions Brought on Constitutional Grounds.--If 
any action is brought for declaratory or injunctive relief to challenge 
the constitutionality of any provision of this Act or any amendment 
made by this Act, the following rules shall apply:
          (1) The action shall be filed in the United States District 
        Court for the District of Columbia and shall be heard by a 3-
        judge court convened pursuant to section 2284 of title 28, 
        United States Code.
          (2) A copy of the complaint shall be delivered promptly to 
        the Clerk of the House of Representatives and the Secretary of 
        the Senate.
          (3) A final decision in the action shall be reviewable only 
        by appeal directly to the Supreme Court of the United States. 
        Such appeal shall be taken by the filing of a notice of appeal 
        within 10 days, and the filing of a jurisdictional statement 
        within 30 days, of the entry of the final decision.
          (4) It shall be the duty of the United States District Court 
        for the District of Columbia and the Supreme Court of the 
        United States to advance on the docket and to expedite to the 
        greatest possible extent the disposition of the action and 
        appeal.
  (b) Intervention by Members of Congress.--In any action in which the 
constitutionality of any provision of this Act or any amendment made by 
this Act is raised (including but not limited to an action described in 
subsection (a)), any Member of the House of Representatives (including 
a Delegate or Resident Commissioner to Congress) or Senate shall have 
the right to intervene either in support of or opposition to the 
position of a party to the case regarding the constitutionality of the 
provision or amendment. To avoid duplication of efforts and reduce the 
burdens placed on the parties to the action, the court in any such 
action may make such orders as it considers necessary, including orders 
to require intervenors taking similar positions to file joint papers or 
to be represented by a single attorney at oral argument.
  (c) Challenge by Members of Congress.--Any Member of Congress may 
bring an action, subject to the special rules described in subsection 
(a), for declaratory or injunctive relief to challenge the 
constitutionality of any provision of this Act or any amendment made by 
this Act.
  (d) Applicability.--
          (1) Initial claims.--With respect to any action initially 
        filed on or before December 31, 2008, the provisions of 
        subsection (a) shall apply with respect to each action 
        described in such subsection.
          (2) Subsequent actions.--With respect to any action initially 
        filed after December 31, 2008, the provisions of subsection (a) 
        shall not apply to any action described in such subsection 
        unless the person filing such action elects such provisions to 
        apply to the action.

    The Chairman. And for the record, I have a statement from 
Congressman Christopher Shays on the substitute amendment. Do 
you all have that statement there? It was handed to me before; 
Mr. Shays came to me and said he supported it--we will get a 
copy, and I will include it in the record. It is from Mr. 
Shays:
    ``I appreciate the House Administration markup of H.R. 513, 
the 527 Reform Act, which will require 527 organizations to 
live by the same rules as other political committees that work 
to influence federal elections.
    ``The substitute clarifies the intent of the original bill. 
While the original bill exempted 527s engaged exclusively in 
state elections from the registration requirement, it denied 
the exemption to groups that carry out ``voter drive 
activities,'' defined as ``get out the vote,'' voter ID, or 
voter registration during a Federal election year. This made 
the exemption too narrow.
    ``The substitute bill ensures in two important ways that 
the state 527s that only work on behalf of non-federal 
officeholders will not have to become federal PACs.
    ``First, it completely exempts organizations of state and 
local candidates or officeholders, groups such as the 
Democratic Governors Association, Republican Governors 
Association, or a state legislative caucus would be exempt, as 
long as their voter drive activities only mention state 
candidates or ballot issues. These groups do not qualify for 
the exemption, however, if they mention federal candidates in 
their communication.
    ``Second, the bill provides a slightly narrow exemption for 
State PACs that are only active in state elections.''
    And I will get a copy to you; it is in the substitute.
    Ms. Millender-McDonald. They just passed it to me.
    [The statement of Mr. Shays follows:]

 Statement of Congressman Christopher Shays on Substitute Amendment to 
                      H.R. 513, the 527 Reform Act

    I appreciate the House Administration mark-up of H.R. 513, the 527 
Reform Act, which will require 527 organizations to live by the same 
rules as other political committees that work to influence federal 
elections.
    The substitute clarifies the intent of the original bill. While the 
original bill exempted 527s engaged exclusively in state elections trom 
the registration requirement, it denied the exemption to groups that 
carry out ``voter drive activities''--defined as get-out-the vote, 
voter ID, or voter registration--during a federal election year. This 
made the exemption too narrow.
    The substitute bill ensures in two important ways that state 527s 
that only work on behalf of non-federal officeholders will not have to 
become federal PACs.
    First, it completely exempts organizations of state and local 
candidates or officeholders. Groups such as the Democratic Governors 
Association, Republican Governors Association, or a state legislative 
caucus would be exempt, as long as their voter drive activities only 
mention state candidates or ballot issues. These groups do not qualify 
for the exemption, however, if they mention federal candidates in their 
communications.
    Second, the bill provides a slightly narrower exemption for state 
PACs that are active only in state elections. The additional 
requirements for these PACs to qualify for an exemption are that they 
can only be active in a single state, and they cannot have a candidate 
for Federal office or Federal officeholder controlling or participating 
in the organization or raising money for it.
    Finally, the substitute makes a number of changes to ensure that 
federal PACs that allocate expenditures can use non-federal money for 
expenditures designed only to assist state candidates even if they make 
an incidental reference to a federal candidate or political party.
    These changes are consistent with the principles set forth in the 
Bipartisan Campaign Reform Act, which sought to make sure that only 
federal money is used for federal election activities, but left state 
election activities in the hands of individual states.

    The Chairman. Yes. I am told by Mr. Shays, that this 
conforms with what the two Senators have had in their original 
bills, as I understand it. Mr. Shays asked for this in the 
nature of a substitute, and I was told that this is agreed to 
by he and Mr. Meehan. And so it is their bill and so I yielded 
to them. Is there any discussion on it?
    Ms. Millender-McDonald. Mr. Chairman, your substitute 
amendment has just come to me about an hour before I walked 
down to this markup, so I haven't had an extensive time--we 
tried to rush through it to look at it. But you are stating 
that you have changed your position now and you are supporting 
the Shays-Meehan bill?
    The Chairman. Changed my position from what?
    Ms. Millender-McDonald. Well, we have the Pence-Wynn bill 
here that you sent out and supported that one, and now you are 
supporting this one.
    The Chairman. No. I hate to take that dead horse, beat it, 
and shoot it, but if we must, I didn't support original BCRA. 
One. Let me say it again; I didn't support original BCRA.
    Two, I didn't support original BCRA. Three.
    Now, having gone to that, I supported Pence-Wynn. I think 
that is the best way. But having said that, I don't think there 
is anything wrong with this. I said weeks ago, if I had my way, 
I would have a hearing on this and a vote. So I am not changing 
anything. I stayed very consistent.
    Any other questions?
    Ms. Lofgren. Mr. Chair, just a couple of comments. I think, 
although an attempt to narrow the effect of the bill 
apparently, it does not cure the constitutional defect that I 
identified earlier. I just would like to note--I mean, clearly, 
each of us are sent here by our district to represent them, and 
America is a very diverse place and we have different points of 
view, and that is one of the great things about America.
    I wanted to ask my colleague from California, Mr. 
Doolittle--you know, he and I don't agree on a lot of things, 
but I do respect his integrity and his point of view. And I 
know he opposed BCRA because he thought it was an impermissible 
intrusion, really, into first amendment rights, and that would 
be consistent against the 527. I mean, at least that would be a 
principled position--I might not completely agree with that to 
the BCRA part--but consistent.
    And so I would hope that consistency might be applied for 
those who oppose BCRA as an unconstitutional intrusion into 
free speech, that that same principle would be applied on this 
measure as well. And I think if we move forward on a partisan 
basis, that is unfortunate. I guess the only good news is that 
ultimately there is an arbiter of the Constitution that will 
sort it out.
    And I thank the gentleman for yielding.
    Ms. Millender-McDonald. Mr. Chairman, just another 
question. With your amendments, are you now ensuring that there 
will be some fair advantage----
    The Chairman. With Mr. Shays' and Mr. Meehan's amendment?
    Ms. Millender-McDonald. Yes. This amendment that you have 
here. Will you correct--because it is my understanding in this 
513 bill, that it gives an unfair advantage to corporations and 
trade associations by allowing them to continue spending 
unlimited and undisclosed amounts of money for political 
purposes.
    The Chairman. I am sure----
    Ms. Millender-McDonald. Does your amendment help to balance 
that out in any way?
    The Chairman. This is from Mr. Shays' and Mr. Meehan's, 
this amendment.
    Ms. Millender-McDonald. This amendment here is not.
    The Chairman. It is not my amendment. I am simply the 
messenger.
    Ms. Millender-McDonald. Well, it is my understanding that 
this amendment still does not and the bill still does not give 
a balance here between unions and other organizations as it 
gives to trade organizations and corporations. That is my 
understanding.
    The Chairman. I don't know that to be a fact.
    Ms. Millender-McDonald. And if that is the case, then of 
course it does not fit with my position at all and I oppose it.
    The Chairman. Mr. Shays and Mr. Meehan gave me this--well, 
Mr. Shays gave me this amendment and said it fits with the 
principles of the bill. I guess it paralleled something done in 
the Senate bill, but I think----
    Ms. Millender-McDonald. I am sorry. Someone said it is your 
amendment. I am sorry; it was his. Well, that is my 
understanding, that it is still in this bill. So I would be 
opposing this bill.
    Mr. Reynolds. Mr. Chairman, point of clarification to help 
us understand.
    Shays-Meehan came before this committee and participated in 
a hearing on their legislation, and we had the opportunity for 
this committee and for the record and for the public to hear 
why they wrote the legislation for 527. We also had Pence-Wynn 
come in and explain their legislation. My understanding, we 
have had a vote on Pence-Wynn.
    You are now bringing before us the legislation on Shays-
Meehan, and your intent is to recommend that we pass this out 
of committee without recommendation, so that it comes to the 
floor as a whole if it is scheduled for a floor vote.
    What I have heard you say now is the amendment before us 
would be an amendment offered by the authors, Shays-Meehan, 
which would mirror what the other body has done, known as the 
McCain-Feingold legislation, that would take, in my instance, 
Erie County and New York State politics out of this and just 
allow it to be oversight of the Federal--or, in Mr. Brady's 
case as chairman of the Philadelphia committee, the city of 
Philadelphia, the State of Pennsylvania out of it, so it just 
would correspond to Federal candidates, Federal parties, on the 
aspect of what it is looking to do in the spirit of Shays-
Meehan.
    The Chairman. If the gentleman would yield. This language 
is what Senators McCain and Feingold have in their bill. And 
Mr. Shays today, I think around 11:00 a.m. or so, had provided 
me the explanation of this. And at Mr. Shays' request I am 
offering this amendment.
    The amendment is designed, again, to exempt organizations 
consisting exclusively of state or local elected officials--for 
example, the Republican and Democrat Governors, National 
Conference, and state legislators--from the requirements of the 
bill, provided they do not reference federal candidates in 
their voter drives. It is very simple. It doesn't go into 
company and union. It is just a very simple amendment. It 
parallels McCain-Feingold.
    And, frankly in Mr. Shays' and Mr. Meehan's opinion, this 
perfects their bill, while paralleling what Senators McCain and 
Feingold have in theirs.
    Ms. Millender-McDonald. But--is Mr. Reynolds finished? Are 
you finished?
    Mr. Reynolds. Mr. Chairman--and then I will gladly yield 
back. In listening to some of the discussion of our colleagues 
on both sides of the aisle, I believe--and with the assistance 
of counsel, if we need it, if I am off base here, because the 
law is rather complex and it is sometimes difficult under BCRA 
law to get two lawyers to agree.
    I believe that BCRA now sets a clear message on 
coordination. And there won't be coordination. And I believe 
that the FEC has powers of enforcement. And I believe there was 
intent by the authors that there would be also Department of 
Justice oversight of BCRA.
    And so there are really two jurisdictions of oversight, so 
to speak, of the law; one by FEC, the other by Department of 
Justice. And what I believe I understand of 527s, they are 
exempt from that oversight, based on there is not any felonies 
or other Federal crimes in this. They had actually, instead of 
contacting the United States Attorney--because they would refer 
you to the IRS--the complaint you would have on the 527s and 
the action of Federal money or nonFederal money or involved in 
Federal campaigns, would be to call up the IRS so when they got 
around to your complaint review, whether the tax exempt of the 
527 would remain or whether it was subject to violations of the 
existing law.
    And so one of the level playing fields, I want to assure 
each and every one of you and all my colleagues that might be 
listening to this, make no mistake, we are under--subject to 
felonies--Federal law, Department of Justice, and FEC, how we 
conduct our business.
    To the best of my knowledge, the spirit of this would bring 
527s into Federal compliance of oversight by both FEC and DOJ 
as well, versus now where it is just an IRS complaint that 
would be dealt with according to when they can fit it in. And I 
understand they are rather overlogged because we are having a 
run of 527s (c)(4)s and (c)(3)s just in this business, in 
addition to all the other tax-exempt status they have.
    We are moving forward here. I understand at least the 
spirit of this legislation would be to put the 527s relative to 
Federal candidates and their interest in Federal campaigns into 
the same oversight as we now find ourselves subject to and that 
we put our national parties under, but that the amendment would 
make it clear, once and for all, that the State of Pennsylvania 
and the city of Philadelphia and the State of New York and the 
county of Erie, which I come from, would be exempt from this 
oversight as long as they weren't there.
    The authors, as I understand it also, when they wrote the 
bill made it clear that our old-fashioned politicking of the 
Northeast--at least in Buffalo, we used to have slate cards, 
and it used to have everybody on the ticket on it. It was felt 
so strongly by the authors of Shays-Meehan, which is now law in 
BCRA, that you can't have a Federal candidate on a slate card 
of local and State officials paid for by soft money. And in 
this instance, I am finding that there is some hesitancy of 
also looking at just segregating State and local officials away 
from this, because it is not concerning them, and it is just 
Federal candidates like us, in the same spirit of the slate 
card, that we would look at 527s' oversight and their 
activities of Federal elections.
    The Chairman. Other----
    Ms. Millender-McDonald. But, Mr. Reynolds and Mr. Chairman, 
it is certainly--you are absolutely right that you would be--we 
are still restricted from engaging in State and local elections 
and those slate cards, because we are under the law of BCRA. 
And so given that, irrespective of the exemption that comes 
from this bill here, you are still under that rubric of BCRA.
    Mr. Reynolds. Absolutely.
    Ms. Millender-McDonald. And so therefore, we still cannot 
engage in BCRA.
    Mr. Reynolds. Absolutely.
    Ms. Lofgren. Would the gentlelady yield? I just want to 
very briefly--because I could be wrong, but I think the 
gentleman was commenting on a point that I made earlier. And if 
not, I will just clarify.
    Because the 527 donors are engaging in protected first 
amendment activity, they are not subject to regulation. 
However, because you can, according to the Court, 
constitutionally regulate Federal candidates to avoid 
corruption, the point I was making is that you cannot tie 
Federal candidates to the 527 activities. If you do, that is 
regulated, it can be regulated, and it is prohibited. And so 
who you would be referring to the U.S. Attorney is the Federal 
candidates who are doing the illegal tying.
    I have not heard, actually--there has been a lot of talk 
about the various ad campaigns. I haven't really heard that 
there was such illegal tying by Federal candidates. You know, I 
didn't like everything I saw, to be honest, but I don't think 
it was coordinated in an unlawful way. If somebody has 
information to that effect, it ought to be sent to the 
authorities.
    I just wanted to clarify that statement. Thank you, Mr. 
Chairman.
    The Chairman. Just a comment. I don't know of cases where 
there are illegalities. It is simply money into the system. Mr. 
Shays and Mr. Meehan are not comfortable with that; their forum 
groups are not comfortable with that. And that is what the aim 
of this law is: to get rid of soft money that was supposed to 
be out of the system. Soft money is not out of the system. This 
is their intent.
    Mr. Brady.
    Mr. Brady. Yes, Mr. Chairman, just briefly. I find myself a 
little confused here. We have a law that nobody seems to know 
legally what you can or cannot do. So then we are in a position 
that we have got to figure out what we can do to surround or 
get around an action that won't find us as a felon.
    And now we have a couple of my colleagues that are putting 
in another bill to amend a bill that we didn't know what we are 
allowed to do with. And now we have another amendment that we 
are not voting yes or no, but we are voting to turn over to our 
colleagues in the big House, in the big room over there, when 
we don't know, still, whether or not we are allowed legally to 
do that.
    The Chairman. The gentleman is correct.
    Mr. Brady. Well.
    The Chairman. The gentleman is correct. And I see nothing 
cloudy about that.
    Mr. Brady. The gentleman is correct and also, again, 
confused. And my good friend from New York brings up my city of 
Philadelphia and State of Pennsylvania. And, yes, this would 
probably take or help out some of our State and local politics. 
But I am their favored son. They won't include me in this; they 
don't want to hinder me in any way, shape, or form. So me, as a 
party chairman, figured out how I can best do this--and I would 
take a ride up to Erie, up in New York, and teach you how to do 
your ballots and slate cards and figure out how to get around. 
It is a little bit of an inconvenience.
    But I just don't understand what we are doing and how we 
continue to do this and how--if we are not going to vote up or 
down with a vote recommendation. So I am glad that I am correct 
in my assumptions and I am glad I am also correct in my 
confusion.
    The Chairman. And I would tell the gentleman, in a 
bipartisan spirit, I am right there with you. Mr. Ehlers.
    Mr. Ehlers. Just to summarize what you just said. You are 
quite right, and many of us don't know what is in the law. And, 
at the same time, we can go to the ``big house'' as a result of 
not knowing.
    Mr. Brady. I have attorneys that are going to go ahead of 
me, sir, for bad advice, because I haven't got the same answer 
from any of them yet.
    The Chairman. Well, let us report the bill. The clerk will 
report the bill.
    The Clerk. Amendment in the nature of a substitute to H.R. 
513, offered by Mr. Ney. Strike all after the----
    The Chairman. Without objection, will suspend.
    Is there any further discussion on the amendment? The 
question is on the amendment.
    Those in favor of the amendment will say aye.
    Those opposed will say nay.
    The clerk will call the roll.
    The Clerk. Mr. Ehlers.
    Mr. Ehlers. Aye.
    The Clerk. Mr. Mica.
    [No response.]
    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. Mrs. Lofgren.
    Ms. Lofgren. No.
    The Clerk. Chairman Ney.
    The Chairman. Aye.
    Five yeas, three nays. The amendment is agreed to.
    Question on the substitute, as amended.
    Those in favor will say aye.
    Those opposed will say nay.
    The clerk will call the roll.
    The Clerk. Mr. Ehlers.
    Mr. Ehlers. Aye.
    The Clerk. Mr. Mica.
    [No response.]
    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.
    Five yeas, three nays. The bill is adopted as amended.
    Before we go on for a motion, are there any closing 
statements members would like to make?
    Ms. Millender-McDonald. Mr. Chairman, I really wish we 
would allow and accord this body to deliberate more on this 
issue as opposed to rushing legislation to the floor as we are 
doing. We hardly have had time to review BCRA since this 
election. We have hardly had time to review some of the 
elements of what you are now putting forth as legislation. And 
my only hope is that we do not see another 527 bill come before 
this committee before we can try to exhaust some of those that 
is already headed for the big house.
    Thank you.
    The Chairman. I would assume this is like Jaws 10. I mean, 
it is going to come back and back and back. And then 
501(c)(3)s. And, of course, if you really want to mess with the 
government, mess with the IRS. They will go after the 
501(c)(3)s, and you won't have to worry about the FEC.
    But, you know, when you have legislation and rules and 
regulations, things happen. I will say I promised Mr. Shays and 
Mr. Meehan, when I talked to both of them, that I would have a 
vote. And I am having a vote. And I think it is a good thing to 
do. I don't control when these things go to the floor.
    I will say I was a bit amazed today; it is one of the only 
legislative bodies in the world where I offer a vote and all of 
a sudden we are trying to kill the bill. That does amaze me. 
But I think they have their ability to have a vote. I think 
people are shocked that we had the vote. But, again, I think 
this is a good thing to do and I think it aims to get at the 
problem. But the bottom line is, even though I didn't agree 
with everybody on the BCRA, all the principals of the House and 
the Senate, they did argue that this will end soft money as we 
know it. And I believe, even not agreeing with them 
philosophically, that they have stepped up to the plate; 
because we all know soft money for both parties has not ended. 
Not to cause an embarrassment, but I think they want to correct 
a problem that was not in the first part, or that the FEC in 
fact did not address, one of the two. I happen to believe it 
should have been addressed in the bill, not by the FEC. And 
that is what I think Mr. Shays and Mr. Meehan are doing here.
    Ms. Millender-McDonald. Well, they are correcting a 
problem, I suppose. But in the meantime, they are also putting 
a disadvantage further on other organizations at the advantage 
of some. And, you know, you can always argue the point that, 
well, there might be some who are going to be slightly 
disadvantaged. But I think you should try and have a fair and 
balanced--that is what Fox News says.
    The Chairman. The gentlelady.
    Mrs. Miller. Just a quick comment here, Mr. Chairman. I 
know we are trying to move on here. But talking about MoveOn, 
it has been my observation just listening to some of these 
comments today, particularly about presumptions of corruption. 
Much of BCRA was based on a presumption that politicians and 
political parties were going to be corrupt and were being 
corrupted by all the money that was flowing in there. And yet 
now we have these 527s with all this money unregulated, and 
there is a presumption that they are not corrupt.
    And I thought it was interesting that you had MoveOn.org 
who said: It is our party, we own it, we bought it, and we are 
taking it back.
    I don't know what anybody would think about that, but to me 
that sounds like something that is sort of corrupt, in my mind. 
And I think we again need to move toward a full disclosure.
    The Chairman. Mr. Ehlers.
    Mr. Ehlers. Mr. Chairman, I just want to offer one comment. 
When asked by my people back home about these various laws, I 
simply comment to them, it is far more important to look at the 
integrity of the candidate than to worry about the details of 
the laws. And I am bothered by all the discussion about 
corruption. I think that corruption has been very limited in 
the past 20 years in political offices throughout this land, 
and we often lose sight of that. We have a lot of good people 
in public office, and they deserve our trust and respect.
    I recognize we need campaign finance laws, but I hope the 
emphasis remains on maintaining the integrity of the 
individuals and not on punishing them.
    Mr. Chairman, I move that H.R. 513, as amended, be reported 
to the House without recommendation.
    The Chairman. The question is on the motion.
    Those in favor will say aye.
    Those opposed will say nay.
    The clerk will call the roll.
    The Clerk. Mr. Ehlers.
    Mr. Ehlers. Aye.
    The Clerk. Mr. Mica.
    [No response.]
    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.
    It is five yeas, three nays. The motion is agreed to, and 
H.R. 513, as amended, is reported to the House without 
recommendation.
    I ask unanimous consent that members have seven legislative 
days for statements and materials to be entered in the 
appropriate place in the record. Without objection, materials 
so entered.
    I ask unanimous consent that staff be authorized to make 
technical and conforming changes on all matters considered by 
the committee at today's meeting. Without objection, so 
ordered.
    Ms. Millender-McDonald. Mr. Chairman.
    The Chairman. The gentlelady.
    Ms. Millender-McDonald. Yes, thank you. Mr. Chairman, 
pursuant to clause 2(l) of rule 11, I am requesting not less 
than two additional calendar days, as provided by the rule, to 
submit additional views to accompany the committee's report on 
this bill.
    The Chairman. Without objection. I want to thank the 
gentlelady and both sides of the aisle members for your 
patience and indulgence today. Having completed our business 
today, the Committee is adjourned.
    [Whereupon, at 2:24 p.m., the committee was adjourned.]

                                  
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