Friday, July 21, 2006

Campaign finance loopholes

Campaign finance reform has put us in a horrible position.

July 21 (Bloomberg) -- A new group called Communities United to Strengthen America has opened 12 "resource centers'' this year for the avowed purpose of educating citizens about issues such as health care and energy conservation.

It is probably no coincidence that all 12 are located in Republican-held congressional districts targeted by Democrats trying to recapture control of the House of Representatives in November's midterm elections.

Campaign-finance experts cite Communities United as an example of the type of nonprofit group that Democrats and their allies are creating to help their campaign, permitting unlimited and undisclosed donations from corporations, unions and wealthy individuals.

These groups are 501(c)(4)s, the new 527s. Congress has threatened to restrict 527s, the democrats bread and butter in 2004, but when you close one loophole another one opens right up. The story above picks on the democrats, but republicans have taken more advantage of the 501(c)(4)s so far, but probably because Soros hasn't opened his pocket book yet. How are 501(c)(4)s different?

[...] Both 527s and 501(c)(4)s are named for sections of the U.S. tax code. Unlike the overtly political 527s, the latter groups don't have to disclose their donors.

By law, the 501(c)(4) groups must spend less than half their budget on political activities. "The only wild card in this equation is whether the IRS will become more aggressive," says Federal Election Commission Chairman Michael Toner, a Republican. "Thus far, I haven't seen any indication that that is occurring."

I'm not even going to get into which is better 527s or 501s, becasue does it really matter? Do we want our campaigns run by activist groups who are taking advantage of loopholes in our tax code? Is that really better than allowing donations larger than $2,000 to a candidate? What I think most people really want is honesty and full disclosure in campaign finance and the reform that McCain/Feingold gave us is nothing of the sort. So why not go for full disclosure? You ought to be able to donate as much as you want as long as the record of the donations are made public. Publish it in the NYT if you want, but if you knew that Cindy Sheehan donated big bucks to Hillary Clinton or Ann Coulter donated a good size chunk of change to Condi Rice would that change your vote, or at least think twice about it? What about the democrat receiving millions from trial lawyer unions and republicans receving millions from the AARP? That's what they needed to do, not cap the amount they can donate. Capping the amount only means the candidate either has to spend 75% of his time doing fundraisers or has to have a ton of money to begin with. In essence we've fostered a system that favored wealthy candidates before and made it worse. There's no way a normal person could afford to run for office in this climate.